Restaurant and Food Service Blog

NexCen Brands Inc., the licensing and franchising company that sank 77 percent yesterday after saying it may have a cash “shortfall,” said it can’t rule out bankruptcy as it considers its options.

“As noted in our SEC filing yesterday, the company believes there is substantial doubt about our ability to continue as a going concern,” the company said today in a statement e-mailed to Bloomberg News.

This company was on a tear with purchasing several restaurant brands such as Maggie Moo’s, Marble Slab and Great American Cookie. Now look. They stock has plummeted and there is talk of the company filing Chapter 11. They just appointed a new CFO in March and it is tanking hard.

This may be one of the first of many casualties in the restaurant industry for 2008. It is not surprising that rapid development like Nexcen in today’s current economy was going to eventually catch up. From shoes to fashion to pretzels and ice cream, I think that D’Loren’s strategy of diversifying is not the answer here.

I would be interested to see if Iconix, a smaller but similar model to Nexcen will follow suit.

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I am sitting here in a Starbucks and have my laptop cranking out a couple of blog entries. Although I have WiFi on my computer, I refuse to purchase the internet connection that they offer here. It seems to me that the company gets it right with everything except their WiFi.

The baristas behind the counter know most of the regular customers by their first name. They all seem very friendly although there are a lot of grumpy faces walking in for their cup of joe. The cases are full of pastries and the espresso machine is cranking away. But what gives about having to pay for the internet?

I don’t mind paying a premium for a good cup of coffee and I have bought into the whole culture. But it seems absolutely insane that the company charges for WiFi when some customers probably already spend a mortgage payment in coffee on a monthly basis.

Just earlier this year, the company announced that in a partnership with AT&T that they were going to start to offer 2 hours of free WiFi to customers who have a Starbucks card. In a couple of blogs and even on the new Starbucks customer forum, many have thought it to be a good step to help the ailing coffee giant. But I think that the company can take it a step further. Or maybe this all points back to the company taking a new approach with Howard Schultz back at the helm.

Just the other day reminded me of this example as my wife and I both work out of the house. As most home base professionals, we need a change of scenery. So we decided to work at Panera Bread for the morning. It gives us a change and we seem to be more productive when we get out every once in a while. When we left the house, our thoughts never crossed about going to Starbucks simply because why pay for the internet connection when I can get it free somewhere else? We ended up getting some breakfast and taking home lunch.

As it turns out, we have started to make it our “date” work day and we are planning to go every Monday AM to get work done. In the long run, Panera will end up with all of our coffee business.  All for giving away something free.

P.S. I posted this when I got home using my own internet!

Starbucks Corp.’s shares got a lift Friday after a regulatory filing disclosed a stake by activist investor Nelson Peltz’s Trian Partners in the coffeehouse giant. It will be interesting to see what Nelson Peltz has in store for the big green coffee giant. At just about every place that Nelson has put any interest in, he has managed to make significant changes.

When he bought shares in Wendy’s, he was able to influence the sale of Tim Horton’s. So from all the Trian holdings from Tiffany and Company to Cracker Barrel there have been big changes.

As the Wendy’s deal will close in Q3 of this year, I would suspect that there will be a lot of moves internally in Columbus. We are sure that Kerri Anderson will be out, but it would be likely that there will be a lot of parachutes opening around September.

We will have to see.

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David Farkas of Chain Leader in his blog had an interesting take on the loyalty of the gay community when it comes to certain brands. 

What do Cracker Barrel, Starbucks and Dunkin’ Donuts have in common with Wal-Mart, Levi’s and American Airlines?

Answer: Gay people either like or despise these companies. A recent Prime Access/PlanetOut.com survey shows that gays, lesbian and transgendered consumers put Starbucks at the top of their list of “gay-friendly” businesses while Cracker Barrel and Dunkin Donuts (along with Wal-Mart) are at the very bottom. 

Interesting to find out that the gay community finds Dunkin Donuts at the bottom of being “gay-friendly”. Not sure what it is about the Canton based company that makes them not “gay-friendly” and Starbucks a place were gay and lesbians can hang out.

By the way, I am not gay…not that there is anything wrong with that!!!!

With Mayor Richard Daley running the vote, the Chicago City Council on Wednesday repealed its controversial ban on foie gras.

The council voted 37-6 to repeal the two-year-old ban, which critics argued had made Chicago–and the City Council–a national laughingstock.

And this all just in time for one of the biggest food/restaurant parties to take place in just a couple of days – the National Restaurant Association Convention at McCormick Place. How uncanny that Charlie Trotter can now dazzle all the foodies that will be descending on the Windy City.

This whole idea of local municipalities being do-gooders and looking out for our well being is ludicrous.

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Baskin-Robbins is rapidly expanding its Texas footprint with today’s announcement that Houston is now open for franchise sales. More than 100 new stores are projected over the next several years throughout Greater Houston area. This expansion falls right in line with the overall Dunkin Brands plan of building 10,000 stores by 2010. Obviously, most of the expansion will be West of the Mississippi.

With all of this rapid expansion, is the brand worried about burn out? Look at what has happened with some recent brands with rapid growth such as Quizno’s and Cold Stone Creamery. A minimum of only 3 stores per franchisee seems like a low number considering that the real expansion is going to come from major developers.

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Consumers will use much of their tax rebate money to pay for increasingly expensive gas and groceries, rather than spend it on electronics or clothes, said the most recent survey by the National Retail Federation. This according to a recent Reuters news feed.

I believe now that we have yet to really see what this economic slowdown will really look like and I feel that the worse is still yet to come. How much higher will gas get? I certainly don’t see any slowdown in food costs. You have got to believe that all of this will adversely effect the restaurant industry. With many households feeling the pinch, we can expect that the hardest hit segment will be casual dining and the fine dining segments. I wouldn’t be surprised if the “recession-proof” QSR segment feels a bit of a squeeze as well. Yes, QSR has the advantage of lower price points and day part -lunch – that is one that most of those working will go for that fast food fix. But I would gather that many more folks will consider brown bagging it a couple more times a week to help save a few bucks.

I mentioned a lot of this in my 2008 predictions for the restaurant industry -(Read the entire 2008 Restaurant Predictions).

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Pollo Campero, the world’s largest Latin chicken restaurant chain, has opened a restaurant in the Wal-Mart Supercenter in Rowlett, Texas, its first ever in a Wal-Mart Supercenter.

First it was Blimpie not the Latin Chicken chain is making waves with Wal-Mart. It will be interesting to see how many of these Pollo Campero’s open up across the Deep South and Southwestern states. This seems like a can’t miss play for the chicken company. A good portion of Wal-Mart’s customer base is probably the same as Pollo’s so the synergy is good. The hispanic market is probably one of the most loyal customer bases around. Win-win in my book.

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The inventor of Jamoca Almond Fudge has died.

What a great story and proof of the American dream. I grew up on Baskin-Robbins and recall my parents taking me as a kid and eating Rocky Road. Baskin-Robbins is one of those great American Brands and is under great stewardship of the Dunkin Brands company.

Irvine – you certainly did a lot to make a lot of people happy – one scoop at a time!

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McDonald’s is a juggernaut. The No. 1 U.S. fast food chain grew 6.1% to $28.75 billion last year. For a little perspective about how big McDonald’s is: Its sales are three times that of No. 2 burger chain Burger King.
Not too bad, considering in 2003 some analysts were saying that the Golden Arches were becoming tarnished.
But now McDonald’s is killing their competition. Burger King is a distant second and Wendy’s has been purchased by Triarc, so who knows what will happen with that unlikely marriage.
In this article, Mary Dillion, Global CMO at McDonald’s is looking to see where she can take the burger behemoth next. There are economic problems here in the US, but I am sure that there are just a wealth of opportunities throughout the world. With the Summer Olympics in Beijing, millions will not only be exposed to China but also the heavy sponsorship McDonald’s will have there.

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