Restaurant and Food Service Blog

We are pleased to announce the formation of Talent Arrow Executive Search – On Target Executive Search for the Restaurant & Foodservice Industries.

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Talent Arrow incorporates emerging technologies and social media with on-target recruiting deployment to offer a contemporary alternative to traditional search models. This assures our clients a fast, measurable and inexpensive alternative to recruiting, hiring and retaining the best professionals available to meet their needs. At Talent Arrow we’ll help you design the search that best suits your needs and guarantee the success of the candidates who we bring on board.

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Stay tuned, we will be announcing information about a ground-breaking offer that you’ll want to be sure to take advantage of before you complete your human resource planning for 2010.

In an article from Yahoo! Business News - Fast Food Giants Urged to Value [the] Meal- a watchdog, Corporate Accountability International, has decided to demand the fast food industry to take more responsibility to whom it markets to. Corporate Accountability names McDonald’s, Burger King, Wendy’s/Arby’s, and Yum! Brands (KFC, Pizza Hut, Taco Bell) as the biggest violators. It goes further to suggest that these companies should “stop aggressively marketing to children, blocking labeling laws, and interfering in public healthy policy.”

Below is a brief excerpt from their formal statement:

Corporate Accountability International issued demands in a letter to CEOs and is launching a national public education and action campaign called Value [the] Meal. The campaign aims to stem the global tide of diet-related disease, in which fast food giants are playing a central role.

“McDonald’s and others reduced the meaning of “value” to how little we pay at the register, ignoring the significant cost to our children’s long-term health and environment,” said Executive Director Kelle Louaillier. “It is about time the fast food industry took responsibility for its role in making our children sick, acting to truly Value [the] Meal, not just to increase sales of ‘value meals.”

I know that there has been a lot of fodder to slam the in restaurant industry especailly with the publication of Fast Food Nation. But there have also been some companies that have been making positive changes or even have been offering healthy alternatives. Take Subway for instance. I don’t think that Jarrod really lost all that weight by eating Subway sandwiches, but it is a better fast food alternative.

I don’t think that the problem is entirely the restaurant industry’s fault. Americans are now leading more sedintary lifestyles and there is less of an importance of eating at home. I know that I am one who will feed my kids dinner out a bag from time to time as I get them from school to after school activities. With two working professionals in the house and three kids, we sometimes have to make decisions based on time and convenience.

Even Papa John’s founder, John Schattner, has made a sort of warning about even eatting his own pizzas.

Where do you fall on the issue?

From CNN.com – During an interview on BBC’s Radio Four program in the United Kingdom, John Schnatter, said, “you can’t eat five or six slices.”

Obesity epidemic shows perils to health reform

It is about time that someone in the industry speak up about the responsibility of obesity in regards to the food that is served by the major chains. I was at the 2008 MUFSO conference in Washington, DC where many there did not feel a direct responsibility for the obesity epidemic. For years, the cigarette industry shrugged off its responsibility to warn its customers of the dangers of its products and even went as far as targeting children and teenagers – the next wave of new smokers.

How is the chain restaurant industry any different from the cigarette manufacturers?

Not much in my opinion. There is nothing wrong with either industry. But a sense of obligation and responsibility is also necessary for this industry to be upfront and honest with its customers. With nearly 2/3 of Americans considered by the CDC as either overweight or obese, there needs to be a change. There is nothing wrong with any of the meals from any of the chains out there. And ultimately, it is up to the consumer to decide what they want to put in their body.  And the responsiblity of the consumer to know that Big Macs will make you fat!

There have been some who have gone as far as recommending that there are food warning labels to help curb obesity in the US.

Where do you stand on the issue?

4 miles. 12 doughnuts. 1 hour.

What happens when you get some college students with cabin fever with an itch for some doughnuts? A race like no other – The Krispy Kreme Challenge. Tomorrow at the North Carolina State University Belltower at 9 AM, about 5000 participants will take the challenge to run 4 miles and polish off a dozen of the finest doughnuts in under an hour.  Last year’s race raised over $20,000 to benefit the NC Children’s Hospital. They already have over 5,000 signed up for this year’s race.

The Krispy Kreme Challenge started in December 2004 as a dare between a few NC State undergraduate students. Sophomore Ben Gaddy took home bragging rights that afteroon, running the race in 34 minutes and 27 seconds. After recieving positive coverage from campus news papers and being placed as #85 on the “102 More Things You Gotta Do Before You Graduate” by Sports Illustrated: On Campus, organizers decided to publicize the Krispy Kreme Challenge and turn it into something that would not only be an event to bring together people from all over the country, but also to benefit important causes along the way.

Since then, the Krispy Kreme Challenge has managed to raise over $30,000 for the NC Children’s Hospital and has brought together people from all corners of the US.

Here is a promotional video from last year’s race.

I will be out there to “support” or probably do my best to finish off a dozen tomorrow. But I know that my two oldest kids will probably be there to help me out! Also, if you just wondering about the nutritional information about downing a dozen Krispy Kremes here are the numbers:

12 Original Glazed Krispy Kreme Doughnuts contain:

• 2400 calories
• 1200 fat calories
• 144g of fat
• 36g of saturated fat
• 0g of trans fat
• 60mg of Cholesterol
• 1140mg of sodium
• 120g of sugar
• 24g of protein

At least there is no trans fat!!

In 2008, I released the first annual “Predictions for 2008 for the Restaurant Industry,” which revealed an increasingly hard time for the U.S. economy.  This had a significant impact on the restaurant industry in addition to several other “on the money” predictions, as seen in the following examples:

• The negative effects of increased energy and wholesale food costs—The price of certain menu ingredients experienced the second consecutive year of at least 4 – 5% price increases, and the price of fuel hit an all-time high in the summer of ’08, posing a significant challenge to restaurants as consumers opted for home cooked meals to save a little money.
• Recruitment and retention were less of a concern—And it was…It was predicted that in 2008, the industry would see a relatively small increase (0.9%) in the employment growth rate. While final numbers have yet to be released, the National Restaurant Association says that “employment in the restaurant industry outpaced the overall economy in 2008 for the ninth consecutive year, despite several months of modest industry job losses.”¹
• Bullish on coffee bars—The Snack & Non-Alcoholic Beverage Bars (Coffee and Dessert bars) was expected to see higher than normal growth compared to other segments. And, in November 2008, the National Restaurant Association presented data revealing that sales were expected to have reached $20.9 billion by year’s end, a significant improvement over 2007’s figure of $19.6 billion.²

Now, one year later, having seen that many of these predictions came to fruition, I bring you my second annual “Predictions for the Restaurant Industry: 2009.” In this report, we find that while not a whole lot is expected to change with the economy and overall sales in the immediate outlook, there are some very interesting trends, that if adopted, could serve restaurants (and their profits) well in the future…

1.    Sales to Continue on the Decline
Declining sales by this point is nothing new. But with a new year, often comes hope for improvement and better times. So is that what can be expected for the restaurant industry in 2009? Unfortunately, it does not appear so. In fact, according to the National Restaurant Association, the U.S. restaurant business is the toughest it’s been in 17 years and the economy will continue to pose a significant challenge in 2009.³   Overall sales are expected to fall 1% from 2008 levels. This can surely be at least in part attributed to declining consumer confidence, which is said to be at the lowest it’s been in 41 years. As a result, consumers are more likely to replace eating out with eating at home, thus the downturn in sales.

But it’s not all doom and gloom. While overall industry sales may experience a decline, specialty areas can expect a slightly better year. According to the National Restaurant Association: “Sales at full-service restaurants are projected to reach $182.9 billion in 2009, an increase of 1 percent from 2008. Quick-service restaurants are projected to post sales of $163.8 billion, a gain of 4 percent over 2008. Eating-and-drinking places will see sales rise 2.2 percent to $395 billion.”⁴

2.    Recruiting and Retention
Unfortunately, 2009 is already off to a rough start when it comes to retention trends, with as many as 50,000 jobs being cut between the first and third weeks of January. With this in mind, it is expected that we will see cuts in the restaurant industry as well; although these cuts are not expected to be as severe as seen in 2008. Many of these will probably be at the mid-level and pre-executive levels, if any. But because of the layoff from last year, we will probably see more companies in hiring freezes throughout 2009. By 2010, which we thought was going to be a watershed year for hiring due to baby-boomers leaving the workforce, we may not be seeing the mass exodus anticipated due to financial unrest in the banking industry. Many boomers may be thinking about putting off retirement for a couple more years.

3.    Continued Rise in Food Prices
In 2007, food prices began increasing at a fairly steady rate of at least 4%. 2009 will make the third straight year for the continuation of this trend, with an expected rise of somewhere between 4 and 5 percent, according to the U.S. Department of Agriculture. National Restaurant Consultants says that “with 25% of our corn harvest now going to produce fuel, the biggest hits will be on cereals and bakery products with a projected 14% price hike on these items, and a 13.5% predicted hike for fats and oils.”⁵  As a result, it is likely that the industry will witness a 3.6% increase in menu prices in the year ahead.⁶

4.    Environmentally-friendly Takes Priority
Green is a word and a trend that the world and even the restaurant industry really started paying attention to in 2008. But in 2009, the trend will take a further hold, affecting everything from equipment to practices. As the highest consumer of energy per square foot when compared with any other type of commercial building, the restaurant industry is set to make changes that will improve this statistic and have a positive effect on the environment. For instance, many operators are installing energy-efficient equipment, are choosing to more closely monitor water usage, are implementing sustainable systems, and are also integrating efficient waste management practices.⁷

5.    A Preference for the Locally-grown
According to the National Restaurant Association’s Chef Survey: What’s Hot in 2009, a total of 89% of surveyed chefs agree that the top trend in menu items for the coming year is the demand for locally-grown produce.⁸  Quite simply, independent operators desire produce that is locally sourced. This is understandable as roughly 70% of adults say they are more likely to visit a restaurant that offers locally produced food items.⁹

6.    Organically-Minded
Number three on the top 20 list of trends according to the National Restaurant Association’s Chef Survey, is the use of organic produce in 2009. That is based on 82% of chefs who responded.¹⁰  This really comes as no surprise. After all, organic food and beverage sales have grown from $1 billion in 1990 to an estimated $24 billion in 2008—an increase of 2,400% in just under two decades.¹¹  National Restaurant Consultants advises restaurant operators that if organic ingredients are used in recipes, to make sure it is advertised for the clientele to see as “increased perceived value is a key to driving sales in 2009 and organics can play a useful role.”¹²

7.    Broader Use of Social Media
With more new subscribers every day to social media outlets such as Facebook, MySpace, YouTube and Twitter, many more restaurant companies will be reaching out to its customer base online and connecting more with Gen Y. With more 3G cellular service available throughout the country, expect more companies to tap into social media outlets for limited time offerings, discounts and coupons.

8.    More Serving-size Options
In 2007 and 2008, the industry witnessed the beginning of a trend that will soon be found in most eateries—the “Right Portion, Right Price”¹³  movement—wherein waste is cut down through the elimination of oversized portions while prices are slashed to fit serving sizes and wallets. In 2009, this trend is expected to spread with smaller plates, prix fixe dining, family-style sharing, and tapas menus (often served during happy hours in bars). In fact, 73% of surveyed chefs say they intend to serve smaller plates and/or tapas to customers, while 83% say they are taking this concept to the next level to bite-size or mini desserts.

9.    Deep Discounting To Attract More Customers
With more households with less discretionary income to spend on dining outside of the home, expect restaurants to have more “free” offerings, Buy One Get One Free, and Limited Time Offerings. In addition, coupons may be more prevalent then years past to get more traffic through the door.

10.    Powerhouse Operators To Look For Overseas Development
With a tight credit market and deep recession, new restaurant development will slow down to a near halt for 2009. Expect unit contraction by weaker concepts and stores especially concepts that are driven by single unit operators. The bulk of any expansion will be by large international brands such as McDonald’s, Burger King and YUM! Brands in overseas growth economies such as China and Korea. The only domestic development may be seen in some conversion of company units to franchisees with the potential of higher profit returns and avoiding any future CAPEX.

With a deep recession that may take many months to recover, many that I have talked to in the restaurant industry agree that 2009 will be a very tough year for everyone.

The first movements of the new year in the chain restaurant industry are beginning to show as Captain D’s announced that David Head has been promoted to Chairman and CEO of the Nashville-based seafood restaurant chain. Head had been president and COO, overseeing all aspects of the business since joining the company in 2006. This is in the wake of Nick Shepherd, Chairman and CEO of Captain D’s parent company Sagittarius Brands, departing the business in February to become President and CEO of Carrollton, TX-based Carlson Restaurants Worldwide, Inc., parent company of TGI Friday’s and Pick Up Stix. Then back to Sagittarius Brands and Del Taco, Del Taco announced that Paul J.B. Murphy III has been named the new Chairman and CEO of the Mexican quick serve chain. Murphy will take over this new role in mid-February and will report directly to the company’s Board of Directors.

With all the movement starting, it will be interesting what new changes will also take place. With Raising Canes officially moving their headquarters from Baton Rouge, LA to Plano, TX, the QSR Chicken restaurant company is looking to build expansion and attract more talent as they continue to grow. They will be another interesting player to keep a watch on for the up coming year. Todd Graves, the founder of the company will remain in Louisiana to assist with the smaller office there that will lend support to the local units there.

As we look to how 2009 will turn out in the restaurant industry, there is sure to be more changes in personnel as well as major reorganization.

Lane Cardwell from the Chain Leader had a great post the other day about the great parallels in sales between the restaurant and retail industries this Christmas season. He used data that was just released by the Thomas Weisel Partners’ 2008 Post-Holiday Sales Report and 2009 Outlook.

Overall, customers are looking for great value and cutting back on all spending. A lot of this was witnessed with the huge sales towards the end of the year to attract customers. But what will bring the customers coming back is having solid service and a relevant concept with a value. The buy a dinner get a free dessert will not work, but rather buy one dinner, get one free.

It is a different set of rules. The companies that can understand the pains of their customers the most and make their concept adhere to the constraints of the average household will win in the end.

I am at the 2008 MUFSO Conference in Washington, DC.  Last night was the kick off cocktail reception that featured many of the great local restaurants in the area. With the wonderful backdrop of the Potomac River and the great food, all we needed were some of the top level brass from some of the companies to show up.  There were a few of the usual suspects that showed up, but the general consensus was about the current state of the economy.

Many of the most tenured executives confided in me that they may have to look at massive cuts in employees, if they have not already.  Moreover, many told me that they were really unsure how long this may take for us to get out of.  If months were not thrown around, some even talked in years.

One this is certain. Everyone is cutting back. It is not just the folks at home who are worrying about making ends meet, but also large corporations. Hey even AIG cut back it annual meeting at the Ritz Carlton at the Half Moon Bay in California just last week!

Hard pressed to find good helping hands these days? Not bothered that these helping hands may not be human?

Then you may want to try hiring the same workers as used by the owners of the Japanese tavern Kayabukiya.

The local hangout just north of Tokyo employs a pair of Japanese monkeys called Yat-chan and Fuku-chan to serve their customers.

The younger of the two, Fuku-chan, usually begins the first shift and is quick to hand out customers a hot towel to help them clean their hands before they order their first drinks.

Fuku-chan, who is four, has only two years experience under his furry belt and his work load is limited to hot towels.

Both monkeys are well appreciated by customers who tip them with boiled soya-beans to enjoy during their down time

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Beef O’ Brady’s restaurants are spreading the word on water conservation.
Nearly 50 franchise owners gave a big boost to the Southwest Florida Water Management District’s free Water Program for Restaurant Outreach, or Water PRO for short.

With conserving natural resources all over the country seeming to be the minds of everyone today, it seems fitting that a chain restaurant concept has finally stepped up to the green revolution. Just last year, Subway introduced a “Green” store to open in Florida. With all the waste that goes on in a restaurant such as water, paper, plastic, food, etc, it is refreshing to see that there are companies that are looking to make a change.

For years, it was only Ben & Jerry’s that was pushing the green movement. They even put language in their mission statement. But now more and more companies are seeing the benefits of becoming green and so are job seekers as well.

So has the tide turned, or is this just a fad? Would you be more willing to shop at a “green” store? What are your thoughts? 

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