To Our Valued Subscribes:

I hope my optimism with our August 1, 2020 edition of American Recruiters Global Foodservice News has resonated with most of you. Although spikes are occurring in certain parts of the country, others are doing quite well. It seems that there is no news in the positive; however, some schools are opening with students in class and certain professional sports are trying to provide entertainment and win games while staying as safe as possible. Our industry is moving slowly and hopefully growing. We Will get past this. Even if this is the new normal, as you and your organization move forward, me and my American Recruiter Associates can provide you with the talent both full time and contract that will enable you to be successful. In a recent piece, penned by noted author Eileen McDargh, CEO of The Resiliency Group, she listed some tough questions you as a leader should ask of yourself and your team going forward. Here are a few to get you started:

• Where are you spending energy without getting the desired results?
• If you could start from scratch, how would you redesign your job, this business?
• How can we grow together as a supportive unit and what do we need from each other?
• What are the small steps we can create to work in a more collaborative way?

If you listen and share without judgement you and your organization will be ahead of the curve when the new cure is established. If you would like to discuss her other questions or learn more about the outstanding candidates, we have available, please call me or my Associates. Enjoy this edition of American Recruiters Global Foodservice News and Stay Safe.

Craig Wilson

President

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McDonald’s Sues Stephen Easterbrook

When McDonald’s Corp. fired Stephen Easterbrook, then chief executive officer, he received a severance package valued at nearly $42 million, according to executive compensation experts at Equilar. Now, the company is suing Mr. Easterbrook for the return of the money and a lot more after an investigation found he’d had sexual relationships with at least three company employees. In a complaint filed with the Delaware Court of Chancery, McDonald’s alleged that Mr. Easterbrook lied about and destroyed information related to his conduct which violated company policy. “Had the Board been aware of this information, it would not have approved the terms of the Separation Agreement dated as of November 1, 2019, by and between Mr. Easterbrook and the company,” McDonald’s said in the court document. “Accordingly, the company has brought an action against Mr. Easterbrook in the Court of Chancery of the State of Delaware to recover compensation and severance benefits that would not have been retained by Mr. Easterbrook had he been terminated for cause. In addition, the company has taken immediate action to prevent Mr. Easterbrook from exercising any stock options or selling any stock issuable in respect of outstanding equity awards.” McDonald’s further alleges that Mr. Easterbrook breached his fiduciary duties as an officer and director of the company. Not only did Mr. Easterbrook have physical sexual relationships with three McDonald’s employees in the year before he was fired, according to the complaint, he approved a stock grant, worth hundreds of thousands of dollars, for one of those employees in the midst of the relationship; and he was knowingly untruthful with McDonald’s investigators in 2019. The company learned of the alleged behavior in July through an anonymous report alleging that a McDonald’s employee engaged in a sexual relationship with Mr. Easterbrook while he was CEO. A subsequent investigation discovered photographic evidence that Mr. Easterbrook had sent as attachments to messages from his company e-mail account to his personal e-mail account. Date and time stamps on the photographs show that the photographs were all taken in late 2018 or early 2019. “Neither these photographs, nor the e-mails to which they were attached, were present on Easterbrook’s company-issued phone when it was searched by independent outside counsel in late October 2019 because Easterbrook, with the intention of concealing their existence from the company, had deleted them from his phone,” the complaint states. “Unbeknownst to Easterbrook, however, the deletion of the e-mails from the mail application on his company-issued phone did not also trigger the deletion of those e-mails from his company e-mail account stored on the company’s servers.” The company is seeking, among other things, compensatory damages for the money paid to Mr. Easterbrook under the separation agreement; attorneys’, accountants’, and experts’ fees; and other costs and expenses incurred by the company by virtue of his misconduct. – Source: Food Business News.

Sun Capital Partners Inc. to Acquire Johnny Rockets

FAT (Fresh. Authentic. Tasty.) Brands announced plans to acquire the Johnny Rockets fast-casual burger chain from an affiliate of private equity firm Sun Capital Partners Inc. for $25 million. FAT Brands is a global franchising company that acquires, markets and develops fast-casual and casual dining restaurant concepts around the world. Johnny Rockets was founded in 1986 with its first location on Melrose Avenue in Los Angeles. The chain serves classic burgers and indulgent, hand-spun ice cream shakes in restaurants known for 1950s diner style décor. Johnny Rockets currently has more than 325 locations across the United States and internationally, including nine company owned locations. FAT Brands will fund the transaction through cash on hand and proceeds generated from the company’s securitization facility. The company expects to complete the purchase in September. The acquisition of Johnny Rockets to the FAT Brands portfolio of companies will add more than 700 franchised and company owned restaurants around the globe with annual system-wide sales exceeding $700 million. FAT Brands currently owns eight restaurant brands: Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Elevation Burger, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises more than 375 units worldwide. “FAT Brands is delighted to carry the torch from the affiliate of Sun Capital Partners, Inc., a global private equity leader with deep investment and operational experience, and run hard,” said Andy Wiederhorn, president and chief executive officer of FAT Brands. “Similar to Fatburger, Johnny Rockets got its start in Los Angeles, and we couldn’t be more pleased to add another true staple in our home city to our portfolio. This acquisition is a transformative event for FAT Brands in terms of scale and brand awareness. We see a lot of synergy with Johnny Rockets and our current restaurant concepts and we are eager to take the brand to new heights.” – Source: Food Business News.

Brinker International to Acquire 116 Chili’s Grill & Bar Restaurants from ERJ Dining

Brinker International, Inc. has signed a letter of intent to acquire 116 Chili’s Grill & Bar restaurants from ERJ Dining. Louisville, Ky.-based ERJ Dining has been a franchisee of Brinker’s for the past 14 years. According to Brinker, the Chili’s restaurants primarily are located in the Midwest and generate approximately $300 million in annualized revenue. “This acquisition is a compelling opportunity to further invest in our brand, broaden our scale and create growth in earnings and cash flow,” said Joseph G. Taylor, chief financial officer and executive vice-president of Brinker. “We appreciate the relationship we developed with ERJ over the years and view these well-established restaurants as a solid foundation for further growth in these markets.” Financial terms of the transaction were not disclosed, but Brinker said it plans to fund the purchase using its existing credit facility. The acquisition is expected to be earnings-per-share accretive and generate incremental free cash flow in fiscal 2020, the company said. One of the world’s largest casual dining restaurant companies, Brinker opened, operated or franchised 1,623 Chili’s Grill & Bar restaurants as of March 27. – Source: Food Business News.

‘People are Going Nuts and Need to get out of the House,’ Restaurateurs say

With the pandemic showing little sign of letting up, consumers — perhaps, families most especially — are seriously missing being able to partake in the simple pleasure of having someone else cook, serve and clean up dinner. Now that many states have reopened, restaurant operators hoping to tap into that pent-up demand are hustling to make dining out more attractive to families with children, despite continued concerns about spending and coronavirus transmission. “People are going nuts and need to get out of the house,” said Clay Walker, president of the San Francisco Bay Area-based Gott’s Roadside. To give families a place to go, Gott’s has extended what its customers already liked about the wine country brand: mainly, its family-friendly outdoor dining with an upscale picnic atmosphere. After the mandated shutdown, Gott’s adjusted its existing outdoor dining space to accommodate social distancing. The concept also grew its footprint in several locations by taking over adjacent parking lots and adding dozens of its signature white-umbrella-topped picnic tables set on bright green AstroTurf. “As opposed to reinventing our concept, we’ve been able to highlight certain pre-existing aspects that people already know and trust,” said Walker. “It’s had an incredible impact on our business.” Additionally, in June Gott’s launched drive-in movies in the parking lot of its St. Helena, Calif., location in partnership with Cameo Cinemas. Now, for $30 per car families can watch a movie and order dinner via Gott’s in-car delivery. “It’s helped sales, but even more importantly it’s provided a community experience during a very painful time,” said Walker.

Making menus more affordable

With the economy still a big concern, some operators are having success attracting families with budget-friendly menus.Playing off of the idea of the monetary stimulus many Americans have received from the federal government, Hudson Grille, a sports bar with locations in and around Atlanta, launched its own “stimulus” promotion for the month of August to bring families back in to dine. The promotion offers each guest with a VIP loyalty card an additional $10 for each eligible $25 purchase. “We’re working to drive more families into the restaurant, and we felt the best way to do that is through a monetary incentive,” said Russ Adams, director of operations for Metrotainment Cafes, parent company to Hudson Grille. The first weekend of the promotion the restaurant saw a 22% lift on guest visits/spends from the previous month based on redemptions.  Atlanta-based Bocado, an American eatery known for its burgers and craft cocktails, is offering a three-course prix fixe menu that families can order in advance of coming to the restaurant. “We wanted diners to feel safe and comfortable, and with the three-course dinner option, our servers can bring out previously selected dishes to guests without the need to order in-person,” said Brian Lewis, owner of Bocado. So far, about 15% of the restaurant’s sales are coming from the $38 per person promotion. Lewis said he plans to offer the promotion until COVID-19 is a thing of the past and restaurant dine-in is back to full capacity. Shortly after the lockdown in Pennsylvania, White Orchids Thai Cuisine and Notch Modern Kitchen, both in Allentown, launched its “Care 4 Kids” deal, which features a complimentary kids meal for every two adult entrees ordered for carryout. “A lot of our customers are families and this promo was created for the stay-at-home families during the lockdown,” said White Orchids and Notch owner Jeff Virojanapa. “I understand the challenges of staying home and the stress of cooking. It’s also a treat for the kids.” From the end of March through June 2, the kids promotions accounted for 69% of takeout sales at Notch and 44% at White Orchids.

Serving up safety

Meal deals and entertaining innovations are appealing to cost-conscious families, but research shows that consumers are still very concerned about getting sick while dining out. Operators who create a safe environment and sense of trust are therefore more likely to see the return of families with kids. “Families don’t want to go where there is risky behavior,” said Walker of Gott’s. “Being a leader in terms of mandating conservative policies, I believe, has made people trust us more and feel safer.” In addition to socially distant picnic tables, Gott’s has been very deliberate about safety signage and requiring — and enforcing — all staff and customers over the age 2 to wear masks, unless eating. For dine-in, Bocado, White Orchids Thai Cuisine and Notch Modern Kitchen have all implemented visible safety measures that follow the Center for Disease Control and Prevention guidelines; the latter has also added QR codes to every table to enable customers to view menus without contact. “The health and safety of our guests and staff is our top priority,” said Bocado’s Lewis. “We have communicated these efforts through our social media accounts and our weekly customer newsletter.” To minimize contact at Hudson Grille locations, the company shifted the full-service operation to quick-casual, installed plexiglass barriers between booths to ensure adequate social distance, and added menu QR codes. “The big attractants,” said Metrotainment Cafes’ Adams, “are the safety precautions and the comfortable, socially distanced booths, as well as patio dining at all of our stores. – Source: Restaurant Hospitality.

Wendy’s Sees ‘Ton of Upside’ in Breakfast

Breakfast has been a bright spot for the quick-service restaurant (QSR) chain as it has adapted to challenging business conditions caused by the coronavirus (COVID-19) outbreak. “We could not be more pleased with our breakfast daypart since its launch in early March,” said Todd Allan Penegor, president and chief executive officer, during an Aug. 5 conference call to discuss second-quarter results. “Despite breakfast being the hardest hit daypart in QSR since the beginning of the pandemic, our businesses continue to grow each month with sales coming in at approximately 8% of total US sales in Q2.” Consumer awareness that Wendy’s offers breakfast was hovering at 50% during the second quarter, according to the company. “We believe that we have a huge opportunity to continue to drive that number higher,” Mr. Penegor said. “This is why we have made the decision to add incremental dollars into advertising to further accelerate our breakfast business and capitalize on the significant momentum we have. “As mobility improves, coupled with our incremental investment in marketing, we believe that this business has a ton of upside moving forward.” Ninety-eight percent of Wendy’s restaurants are open in some fashion and same-restaurant sales have grown to the high single digits in the United States for the month of July, said Mr. Penegor. “As we moved into June, we continued to see our sales accelerate as restrictions began to lift and as mobility began to increase slowly across the country,” he said. “Within the quarter, we have seen significantly improved customer counts since the lows of COVID. We continue to see very strong average checks as ordering sizes have remained elevated, which is helping to drive restaurant margins across the system.” Net income for the quarter ended June 28 totaled $25 million, equal to 11¢ per share on the common stock, and a decline when compared to the same period during fiscal 2019 when the company earned $32 million, or 14¢ per share. Sales for the quarter fell to $164 million from $181 million the year prior. “Our global same-restaurant sales accelerated each month during the quarter on the strength of our breakfast daypart that continues to build, a growing digital business and increased mobility around the globe,” said Gunther Plosch, chief financial officer. “These gains were more than offset by the declines that we saw as a result of COVID-19 … ultimately landing with same-restaurant sales down 5.8% for the quarter.”   Digital sales grew to approximately 5% of sales, double the amount the company achieved in 2019. “We have expanded both our delivery and mobile ordering businesses in the US as safety and convenience are paramount concerns for consumers in the current environment,” Mr. Penegor said. “We have now successfully added Uber Eats, so you can now order Wendy’s from all of the major delivery providers in the US. As we have stressed before, frequency remains an opportunity for us. And it will be more important than ever as normal routines resume in the months to come.” Management suspended its guidance earlier this year and did not offer an update. “Given the continued volatility and uncertainty surrounding the future impact of COVID-19 on the global economy and its impact to our company, we are still unable to provide a 2020 and long-term outlook,” Mr. Plosch said. – Source: Food Business News.

The Largest Restaurant Companies Most Likely to Default Include Dave & Buster’s, Bloomin’ Brands and Denny’s

As the restaurant industry attempts to slowly recover from the wide-ranging effects of the ongoing coronavirus pandemic, AS\\according to S&P Global Market Intelligence the odds that a restaurant will default on its debt fell to 10% in July from 35% in April. For larger chains, performance and financial stability is almost where it was a year ago, with the odds of a publicly traded restaurant defaulting on its loans at 12% in August, compared with 8% a year prior. But the good news of long-term industry recovery highlights the comparatively challenging times and precarious performances for smaller chains and independent restaurants, along with struggling categories like eatertainment and casual-dining chains. According to S&P data, the largest publicly traded restaurant companies most likely to default on their loans are Dave & Buster’s Entertainment Inc. (16.1% probability of default), Bloomin’ Brands Inc. (13.2% probability of default), Denny’s Corp. (11.9%), The Cheesecake Factory (11.7%), and Dine Brands Global, Inc. (11.3%). But even though the casual-dining industry has struggled to recover, according to S&P, every single one of these brands has improved since the beginning of the pandemic. For example, in April Dave & Buster’s was 56% likely to default on its loans within a year. “Nearly every big chain has done something to support its balance sheet,” James Rutherford, a vice president and research analyst at Stephens Inc., told S&P Global Market Intelligence. “The place I do see risk for default is going to be with franchisees.” NPC International, one of the largest restaurant franchisees in the country and owner of Pizza Huts, Wendy’s locations and more in 30 states, filed for bankruptcy in July, citing increased labor and commodity costs. The performance of some of the most vulnerable brands has faltered, like Dave & Buster’s, which reported a net loss of $43.5 million for its first quarter ended May 3, although some analysts believe that they could bounce back after the pandemic is under control. “With many competing ‘eatertainment’ concepts still struggling to reopen, Dave & Buster’s appears poised to benefit from a more favorable competitive environment post-pandemic, following several years of pressure from the rapid expansion of myriad new concepts,” Sharon Zackfia, a William Blair analyst, said. Meanwhile, Bloomin’ Brands has seen a significant sales bounce back with sales down as little as 4.2% in June after the casual-dining company began reopening the majority of its dining rooms. Bloomin’ attributes much of their bounce back to committing to not laying off or furloughing workers. Despite the improvements, S&P maintains that restaurants are still among the hardest hit industries and that the future stability of restaurants depends on the stability of the consumer. – Source: NRN.

But Delivery is Increasing, and Pickup is Preferred — Because People just Want to Leave the House

Despite the ongoing pandemic, consumers are warming more to the notion of dining out — something they yearn to do more — but more than two-thirds say they still prefer cooking and eating at home out of concern about exposure to coronavirus, according to new research by global consulting firm AlixPartners. Adam Werner, AlixPartners managing partner, said during a Restaurants Rise webinar on Thursday that the firm has been surveying consumers across the U.S. through the ongoing pandemic and results indicate the relationship between diners and restaurants is evolving. Looking at data from July compared with surveys in April, Werner said, “Consumers are gaining more confidence. But as they gain more confidence, their expectations are actually rising.” While restaurant spending is still fairly low, it’s still No. 1 when you ask consumers how they’d like to spend their dining dollars, he said. “Consumers are looking to dine out. It’s not all doom and gloom. They want to go. They need to leave the house, but they want to feel safe,” he said. Between April and July, the percentage of consumers that said they prefer cooking at home remained the same: 61%. But their reasons for staying home changed somewhat. In July, for example, 45% of consumers said takeout/delivery was too expensive, up from 39% who said the same in April. But consumers appear less concerned about limiting contact with people. In April, 49% said they stayed home to limit contact with people, and that dropped to 44% in July. More than half of consumers surveyed (51%) had returned to dining out, though 6% said restaurants in their area were not yet open. Of the 43% that had returned to restaurants, 16% had only dined outdoors, and only 29% said they would dine out again within the next two weeks. Consumer sentiment about delivery and takeout is also evolving, Werner said, with about 57% of consumers now ordering delivery or takeout at least once a week. Though use of delivery is increasing, consumers still prefer to pick up their own food — in part because they want to avoid the added expense of delivery, but also because of concerns about health and safety. And 47% of consumers said they just wanted to get out of the house. Werner urged operators not to overlook the consumer experience of picking up takeout, saying restaurants should make it as easy as possible. “The consumer experience is suffering and those that get it right will win,” he said. Restaurant operators should also consider that not all delivery/takeout customers are the same, and they should tailor their offerings for high-frequency users who order more than once a week — who tend to be male and younger, but cross all income levels. What has to change for consumers to feel more comfortable about dining out? Consumers want to see safety cues. Werner said consumers look for opportunities to dine outdoors. They like to see mask mandates and disposable menus, for example. Consumers are also looking for discounts as incentives to dine out, but that is not as important to them as health-and-safety, he said. Some highlights of Werner’s recommendations:

Continue to evaluate your off-premise tactics. Things that didn’t work in April might be more viable now. “And don’t forget about pickup,” he said. Prepare for the unexpected. Operators are expecting capacity limits to increase, but it may not happen in a steady line. “It might be zero, then 25%, then back to zero again,” he said. Broadcast your health-and-safety standards very loudly. Make sure guests see that the front of the house is operative very differently to protect both guests and workers through the crisis. Look for ways to cut costs. Don’t skimp on health and safety, Werner said, but restaurants can make their menus more efficient and work with suppliers to find cost reductions. “Looking under every rock for improvements tied to other costs across your P&L is definitely important, but I would say start with your supply chain and go from there,” he said. “Now is the time to think about longer-term sustainable cost reduction programs to weather the storm,” he added. “It’s amazing how fast entrepreneurs in this space can figure out a solution. If you haven’t by now, what are you waiting for?” – Source: This is part of special coverage of the Restaurants Rise digital summit taking place Aug. 11-13 and Aug. 18-20, powered by Nation’s Restaurant News and Restaurant Hospitality. Register for live sessions or on-demand replays at RestaurantsRise.com. Title sponsors for Restaurants Rise include Campbell’s Foodservice, GrubHub, Idaho Potato, ShiftPixy, Wisely and Impossible.

In the Works for the Casual-Dining Chain: Remodels, a new Prototype Store, Expanded Outdoor Dining, and Donatos Pizza in Seattle

Red Robin Gourmet Burgers reported a net loss of $56.3 million for the second quarter, a plunge the casual-dining company said was driven by multiple operational shifts tied to the COVID-19 pandemic. Same-store sales decreased 41.4% for the quarter, driven by a 38.5% decrease in guest traffic and  a 2.9% decrease in average check. The latter comes as most companies have reported higher check averages during the pandemic, due in part, to consumer spending on large dinner orders.

The pandemic couldn’t have happened at a worse time for the brand, which at the start of the year had launched a major turnaround plan under newly appointed CEOPaul Murphy That playbook included adding Donatos Pizza to restaurants, improving dining-room service dubbed Total Guest Experience, and remodeling restaurants. Murphy said the company has logged sequential improvement in average weekly net sales for the past five weeks through Aug. 9. Those improvements come despite the brand being forced in early July to reclose dining rooms in 53 restaurants in its core market of California. For the quarter ended July 12, off-premise sales increased 208.7% and accounted for 63.8% of total sales. “We’ve made it easier for guests to enjoy our food outside of our restaurants” through curbside pickup and two delivery options — third-party delivery and direct delivery through the company’s digital channels, Murphy said. In states that are allowing 75% capacity, Red Robin said it is planning to add partitions to dining rooms at about 155 restaurants. In addition, the brand is expanding outdoor dining in areas where local officials have allowed makeshift patio dining. Murphy told investors during the company’s Tuesday afternoon conference call that Red Robin plans to reboot its turnaround plan by adding Donatos Pizza to 31 restaurants in the Seattle area. Murphy said restaurants that currently have Donatos on the menu have recorded higher sales. The brand also plans to roll out a new prototype store in 2021, and will look at remodeling some stores this year. “Red Robin is strongly positioned to emerge from the pandemic and resume our strategic plan,  thereby transforming the business for future growth,” Murphy said. As stated in its last earnings call, Murphy reiterated that trimming the menu during the pandemic has worked well for restaurants. The menu now has one-third fewer items, which has reduced complexity and food costs in the kitchen, while at the same time, increasing throughput. “We have used the focus created by the pandemic to improve the quality of our operations and build trust and loyalty with our guests that will pay dividends long into the future,” Murphy said. Total revenue decreased 47.7% to $161.1 million. The company closed the quarter with 552 restaurants. Of those, 346 were open for indoor dining at limited capacity as of Aug. 9. – Source: NRN.

Thomas Keller to Permanently Close TAK Room and Bouchon Bakery in Hudson Yards

Famed chef and restaurateur Thomas Keller on Wednesday announced that one of his newest restaurants is closing permanently because of “irreparable damage” from the pandemic: TAK Room in New York City’s Hudson Yards complex. His Thomas Keller Restaurant Group is also shuttering a location of Bouchon Bakery that was also in the sprawling 18 million-square foot Hudson Yards dining, shopping and entertainment district, which opened last year. Keller is best known for his signature restaurants The French Laundry in Yountville, Calif., and Per Se in New York City. The company operates one other Bouchon location in the city, though it hasn’t reopened since the pandemic shutdown in the spring. Other Bouchon locations in California and Las Vegas have reopened, however. In a statement, Keller said, “These decisions were not made lightly. They came after painful deliberations amid a pandemic that has devastated the global economy and caused irreparable damage to our business and profession. Given the challenges of the last five months; we could not find an economically viable path to continue operating without expected seasonal, New York tourism and traffic.” Keller thanked his teams for their dedication, talent and professionalism, and thanked guests for their unwavering support. And he added, “Our profession continues to face long-term, daunting challenges and much work lies ahead. But we are resolute. While this news is devastating, we remain hopeful for the future, and committed to advocating for independent restaurants whose survival is so crucial to the wellbeing of communities everywhere. We will look forward to a time when we can rebuild.” In an interview last year, Keller said TAK Room was inspired by a restaurant style from the period after World War II through the 1960s, when restaurants like The Stork Club, The Colony, The Brown Derby and Chasen’s were known for “continental cuisine,” but also a social and community  hub. He described it as a “casual restaurant where you could go more than once a week, you could see your friends,  you could bring your family, you could entertain, you could listen to great music and have a lot of fun with the service staff there to also engage,” he said at the time. Keller, who was inducted in the MenuMasters Hall of Fame earlier this year, is among a growing number of widely regarded chef-owners who sued their insurance companies over denial of claims during the coronavirus crisis. Those lawsuits are ongoing. – Source: Retaurant Hospitality.

The Entrepreneur said he Intends to Start a Business Incubator

Robert Thompson has resigned as CEO of Punch Bowl Social, the food-and-entertainment concept he founded eight years ago, to form an innovation lab for developing products aimed at millennials and Gen Zers. His resignation is the latest twist for a venture formerly hailed as one of the restaurant industry’s hottest concepts. Thompson had successfully pitched Cracker Barrel Old Country Store on becoming a partner in Punch Bowl, where it would provide capital and expansion knowhow to help the brand grow beyond what were then 20 branches. Cracker Barrel invested $140 million for a minority stake in Punch Bowl, stunning the industry. But when the pandemic hit just one year later, Cracker Barrel announced it was divorcing itself from the venture and would not provide the capital needed to keep Punch Bowl from defaulting on its loans. Thompson’s brainchild laid off all 2,300 of its employees and shut its restaurants, two of them permanently. Its founder immediately commenced what he described as a determined scramble to find new partners. Punch Bowl’s website lists 16 current locations, with six more under development. Millennials and members of so-called Generation Z were prime targets of Punch Bowl, which offered an array of foods, cocktails and games. The announcement of Thompson’s departure from the chain indicated that the entrepreneur’s new incubator business is already working on several products aimed at those demographic groups. It was not clear if they are restaurant-related.

Dining with heaters, blankets and plastic domes?

As the end of Chicago’s patio season approaches, restaurant leaders are urging local officials to take a cue from Northern European cities and Colorado ski towns to encourage outdoor seating even as the weather turns cold. Sam Toia, president and CEO of the Illinois Restaurant Association, said the trade group has been having conversations with the city and state about extending street closures and using tents, heaters, blankets and plastic domes to give restaurants more seating capacity as COVID-19 restrictions continue. “We have about six weeks,” Toia said Wednesday during a virtual speech to the City Club of Chicago. “We need to start thinking outside the box right now. … because we could be in this for the next six months and we want to be ahead of the curve.” Restaurants were devastated by the mandatory closure of dining rooms for more than three months, and about 5,000 Illinois eating and drinking establishments are expected to close permanently as a result, said Toia, based on estimates from the National Restaurant Association that put closures at 20% to 25%. They continue to suffer amid occupancy restrictions designed to prevent the spread of COVID-19. In Chicago, indoor dining is permitted at no more than 25% capacity. Outside of the city, state social distancing rules requiring 6 feet between tables typically means restaurants can’t be more than half full. Outdoor dining has been a saving grace for restaurants with the space for it, and the city has reduced sidewalk fees, streamlined the process for getting an outdoor seating permit and blocked off some streets to allow tables to be set up there. When the weather no longer cooperates, “we could really be in trouble,” Toia said. He urged local officials to take a page from Toronto, Paris and Colorado ski towns to make outdoor dining feasible into winter. The restaurant industry, which was Illinois’ largest private-sector employer pre-pandemic with nearly 600,000 workers, continues to suffer amid the restrictions and continued consumer wariness of spending much time in public. Though dining rooms were permitted to reopen in June, sales at restaurants remain 50% to 80% lower than last year, and 86% of restaurants say they don’t expect to turn a profit by the end of the year, Toia said. “Building consumer confidence back up is definitely a challenge,” Toia said. The Illinois Restaurant Association has called for another round of forgivable loans through the Paycheck Protection Program after the first allocated just 8% of funds to the restaurant industry. The group also backs a federal bill to create a $120 billion relief fund that would provide grants to independent bars and restaurants that have been hurt by the pandemic. “We need a bailout from Washington, D.C., like they’ve done in the past for the airline industry, they’ve done for the banking industry, they’ve done for the auto industry,” Toia said. – Source: The Chicago Tribune.

Chuy’s is Staffed and Prepared to Weather COVID

Back in March, the COVID pandemic hit Chuy’s as hard as any other full-service brand. The chain was forced to furlough 80 percent of its hourly staff and operate off-premises with limited menus at 92 of its 101 locations. Same-store sales reached a low of 67 percent in the week ending March 22. But as dining rooms have reopened, sales have increased in subsequent weeks. Chuy’s has seen its pivot in operations—enhanced takeout, curbside pickup, delivery with national partner DoorDash, and family meal and beverage kits—continually flourish into August. Average weekly sales improved from $38,800 in April with no indoor dining to $70,500 in June with 92 dining rooms open. Off-premises also remains more than double than it was pre-COVID. In Q2, to-go sales mixed 60 percent. Early into Q3, the channel still captures roughly 35 to 40 percent of sales. As a result, Chuy’s rehired a majority of its furloughed employees by the end of Q2. Quarter-to-date, restaurants are staffed, and salaries have returned to normal. And in June, the chain generated higher free cash flow year-over-year with lower sales. “While we expect that our restaurant operating costs will increase when the dining room capacity restrictions are further loosened, we are confident that we can build upon our recent operational efficiency to positively impact our business over the long run,” said CEO Steve Hislop during Chuy’s Q2 earnings call.

Same-store sales improved from a decrease of 55.2 percent in April to a decline of 44.8 percent in May and then to a drop of 21.6 percent in June. In July, comps slightly reversed, coming in at 26.3 percent. That can be attributed to the rise in COVID cases across the country and the reinstitution of stricter mandates, like in Texas and Florida. Hislop said comps dropped about 13 to 14 percentage points in the first couple of weeks of July. However, he added that “people finally started getting tired of that, and they get out again.” So toward the end of the month, the slide was 5 percentage points. The CEO explained that Chuy’s has turned to outdoor dining to improve seating capacity. In the past, the patio business used to be 7.9 percent of sales. It’s grown to 10 to 13 percent during the pandemic. “When we are at 50 percent capacity, which is where we are on most states, I don’t know that we can really do inside much more than that—maybe 50 percent or 60 percent because of the 6-foot distancing,” Hislop said. “There are a few things that we can do with the place—the glass on booths, and things like that. However, we don’t have that many booths. So that doesn’t help expand our dining room that much either. And so, at 6-foot distancing, we can really expand our patio and get a little extra booths, which we’re seeing that now. … And the biggest thing is just really promoting and driving the heck out of to-go.” Comp sales in Q2 dropped 39 percent, including a 42.8 percent slide in average weekly customers and 3.8 percent increase in average check. Revenue dropped from $113.1 million in Q2 2019 to $65.7 million this year, or a 41.9 percent decrease. Hislop acknowledged that some competition has closed its doors, giving Chuy’s an opportunity to grow in markets even more than they are right now.  However, the company still has nine stores that have been closed since the beginning of the pandemic. The CEO said he plans on visiting those stores soon to get an update on their viability. “So, after this is normalized and we’re comfortable traveling all over the country, I’m going to visit our stores along with our real estate department and really look at what’s happened in the environment, and specifically the competitive environment and all those closed stores,” Hislop said. “And then I’ll start making determinations whether we’re going to open those are not. Until that time, I’m just saying they’re all temporarily closed. But obviously, even in some markets where maybe in the past I haven’t been able to get into because of the number of stores, we love the hermit crabs. So we like to go into those markets and we look at some opportunity events and see if we can pick up some of those that will expand our footprint in our existing market points.” Now that dining rooms are open, Hislop said the company will resume its marketing effort in Q4 with key messaging on value, convenience, and safety. The limited menu will stay through Q2, but toward the end of 2020, the brand will have ‘a handful of items pop back on the menu.’ “We had a great quarter, and our sales momentum continued thus far into the third quarter despite the recent roll back in dining room reopenings in certain states,” Hislop said. “Our business operations are more efficient and our balance sheet is strong. While there continues to be a level of uncertainty surrounding COVID-19 in the near future, we believe our team is very resilient and will remain nimble to adapt to any challenges in the market condition.” – Source: fsrmagazine.

Famous Dave’s Inches Closer to Normal Sales

Faced with a treacherous casual-dining environment, Famous Dave’s is approaching historical sales levels this quarter. The brand declined 7.4 percent in July after seeing a 22.9 percent decrease at company-operated stores in Q2 and a 31.5 percent slide at franchises. Fueling the consistent improvement in sales has been growth in off-premises. Early into the pandemic, Famous Dave’s quickly deployed curbside pickup and constructed makeshift drive-thrus with cones and signage. Famous Dave’s also worked with Elliot Baum, franchise owner of 15 Famous Dave’s restaurants, to open a ghost kitchen in downtown Chicago in April. The leverage of takeout, curbside, and third-party delivery resulted in a 106 percent increase in to-go sales at corporate units. This was offset by a decrease of 77.8 percent in net catering sales and 86.8 percent plummet in dine-in sales. In most locations, restaurants are operating with 50 percent capacity. “The quarter has been challenging with the continual changes in state and local dining restrictions,” said CEO Jeff Crivello, commenting on BBQ Holdings’ Q2 earnings. “Famous Dave’s stores have been performing well through the numerous changes and have continued to increase our to-go business through strong social media marketing as well as the use of our delivery service providers. We are hopeful that dine-in sales at the Famous Dave’s stores will provide incremental sales as restrictions are lifted and override catering sales which are slowly coming back.” Famous Dave’s ended Q2 with 94 franchises and 30 company-run locations. BBQ Holdings portfolio also includes Real Famous Barbecue, Clark Crew BBQ, and the recently acquired one-unit Real Urban Barbecue, and Granite City Food & Brewery. In February, BBQ Holdings announced that it agreed to purchase 18 Granite City units—the company’s first move outside of the barbecue sector. Because of Granite City’s reliance on dine-in traffic, sales were hit harder in Q2, but have also rebounded. In Q2, comps slipped 65.5 percent. But same-store sales lifted from $900,000 in April to $3.4 million in June as restrictions eased. Granite City is off to a better start in Q3; July comps decreased 33 percent. “The Granite City brand has seen a significant increase in sales as dine-in restrictions have lifted and we believe that the uptick in sales will continue so long as restrictions continue to ease,” Crivello said. Q2 revenue increased 28.2 percent to $27.1 million. The growth was due to the addition of Granite City, Clark Crew BBQ, and Real Urban Barbecue since the year-ago period. BBQ Holdings swung a net loss of $6.3 million, $0.68 per share. Also of note, BBQ Holdings entered into multiple franchise agreements in the quarter. The company entered two agreements with existing franchisee PDX Partners to offer Famous Dave’s products via delivery and takeout in two California Johnny Carino’s locations. The other agreement involved new franchisee DCI Colorado Springs #2. BBQ Holdings is co-branding the operator’s Texas T-Bone Steakhouse in Colorado Springs with Famous Dave’s. “While we have been prudent in managing our cash as the stores reopen, we continue to be concerned about the future direction of the COVID-19 pandemic and will, therefore, continue to manage our cash appropriately,” Crivello said. “We are very pleased to see the resiliency of Famous Dave’s during this pandemic and that other restaurant groups are looking to team with us based on our recently executed franchise agreements.” – fsrmagazine.

Whiskey Cake Names Ray Risley President and Chief Operating Officer

Risley, a seasoned hospitality executive, brings a long track record of attracting and developing high-level talent to Whiskey Cake. With an impressive history of progressing leaders in the industry, Risley creates a culture amongst employees that promotes the continued ability to adapt, evolve and thrive. “Ray’s strength in growing brands through investment in team is unique and we are excited to have his exceptional leadership at the helm as we grow Whiskey Cake into a nationally recognized brand,” says Front Burner Restaurants CEO Jack Gibbons. “In any great organization, the ability to adjust and grow is only as strong as the leadership teams you build. Ray is laser-focused on developing leaders and amplifying brands. His expertise will impact our rate of growth and ability to translate the brand to guests in new markets.” When Risley isn’t working side-by-side with his team, he’s putting his sharpened carpentry skills and appreciation for home-grown vegetables to use. With a handcrafted large box garden that grows tomatoes, herbs and peppers in his backyard, Risley’s personal interests align perfectly with Whiskey Cake’s farm-fresh menu. “I am thrilled to join the Whiskey Cake team and take on this new role,” Risley says. “I believe a strong cultural and operational foundation will enhance the potential of this innovative restaurant brand. I am also incredibly excited to lead a brand that nurtures relationships with local artisans to deliver farm-to-fork dishes. This is a perfect marriage of my personal and professional passions.” Whiskey Cake reimagined the neighborhood restaurant almost ten years ago by serving up farm-to-fork dishes and garden-to-glass cocktails out of its scratch kitchen and bar; in other words, familiar American food that has been revved up a notch. Microwave? Never heard of it. Whiskey Cake uses slow-cooking methods on a live wood grill, smoker and spit because everything tastes better that way. In addition to offering delicious dishes, Whiskey Cake’s energetic bartenders hand-make whiskey cocktails and bold elixirs from premium liquors and fresh ingredients picked straight from their on-site garden. Whiskey Cake also offers a wide selection of micro-brewed beers, whiskey flights and curated wines. – Source: fsrmagazine.

Chipotle Teams up with Skateboarder Tony Hawk on Esprts Promo

Chipotle Mexican Grill is again enticing customers to order via its digital channels, this time through an esports partnership with skateboarding superstar Tony Hawk, the chain announced. Hawk’s favorite Chipotle order—a burrito made with brown rice, black beans, chicken, tomatillo-red chili salsa, cheese and guacamole, will now be available through the fast casual’s app and website. The first 2,000 customers who order the Tony Hawk Burrito will get access to a demo version of the re-launch of the skateboarder’s Pro Skater 1 and 2 video game. On Friday, Hawk will appear on a two-hour livestream from Chipotle’s page on the gaming site Twitch, where he and others will give away up to 5,000 free burritos to viewers. “The first-of-its kind menu integration gives our fans a chance to eat like the greatest skater of all time and get access to the demo for one of the summer’s most anticipated video game release,” Chipotle CMO Chris Brandt said in a statement. Since 2013, Hawk has been a Chipotle “celebrity card holder,” an exclusive membership tier that grants free meals and catering. Chipotle launched its Twitch channel earlier this year and has since racked up more than 27,000 followers there. The chain’s Chipotle Challenger Series of esports events allows amateur gamers to compete against gaming pros as well as celebrities. The events are livestreamed from Chipotle’s Twitch channel. Chipotle has seen tremendous growth in its digital business recently, with its second makelines for digital orders now averaging $1 million in sales per unit each year. – Source: Restaurant Business.

The State of Sustainability During COVID-19 in the Food Industry

As more consumers have shown concern for the environmental footprint of their food in recent years, businesses have taken notice. In a survey of senior executives at consumer packaged goods companies, a majority of respondents reported that corporate sustainability efforts improved revenue and customer loyalty. The National Restaurant Association’s 2018 sustainability report noted environmental sustainability as one of the top menu trends for the year. This trend is expected to be long-lasting, and consumers are still focused on sustainability even during the coronavirus pandemic. CPG products that touted their sustainable aspects experienced a 56% biist in sakes in the second week of March — when consumer stockpiling of essential items was especially high, according to data from market research firm IRI and the University of New York Stern Center for Sustainable Business. This suggests the pandemic has not affected shoppers’ desire for sustainably produced food.

Foodservice industry prioritizes waste reduction, robust supply chains.

International restaurant chain Nando’s is one of many foodservice businesses committed to delivering quality food that is also made sustainably. These commitments include sourcing chicken from local poultry providers for its US locations. Because of these sustainable supply chain models, Nando’s was able to continue to meet consumer demand when the pandemic reached the US while still maintaining the company’s sustainable operations, according to Nando’s USA spokesperson Sepanta Bagherpour. Nando’s signature PERi-PERi chicken also requires the African Bird’s Eye chillies grown in Mozambique, Malawi and Zimbabwe. “Besides giving farmers access to the latest farming techniques, quality seedlings and finance, we also give them a fixed outlet for their crop, commit to a predictable demand, and provide a premium for every kilogram of chillies harvested,” said Bagherpour.  “It’s the ultimate sustainability model.” The coronavirus pandemic has also created challenges for the food industry in terms of consumer waste. Many foodservice operators had large amounts of food that would go to waste during state-mandated lockdowns and decreased customer traffic — Nando’s quickly pivoted to ensure their excess food didn’t go to waste. Since March 26, the business has donated and distributed over 100,000 meals to health care workers, Nando’s employees and other out-of-work restaurant industry workers for free, Bagherpour noted. “Our customers care about the source of their food, and that doesn’t change during a pandemic … Customers care about quality and sustainability, but their top priority now, understandably, is our health and safety protocols — and that’s our top concern, too.” added Bagherpour. New York’s The Oberon Group comprises food, beverage and hospitality businesses that operate as carbon-neutral or carbon-negative establishments. The group’s supply chain management focuses on carbon drawdown measures and regenerative agriculture, and the packaging at all businesses is upcycled, compostable or recyclable. While operating during coronavirus-related shutdowns has been difficult, Oberon has found ways to navigate the obstacles. “COVID-19 undeniably impacted our ability to operate,” said Halley Chambers, deputy director of The Oberon Group. “However, with such a clear central mission, making decisions about how and what to serve is actually easier, because it needs to align with our long-term goals.” When takeout and delivery orders exploded at the beginning of the pandemic, Oberon’s natural wine bar Rhodora and catering company Purslane already had models in place that ensured zero-waste production, such as serving to-go beverages in reusable containers that consumers can keep and only using recyclable, compostable or reusable materials for food takeout. The group is also providing local compost services, which isn’t currently available to New York City residents, said Chambers. Even during the pandemic, The Oberon Group has launched sustainability programming via the Rhodora and Purslane social media accounts — bringing information and conversation to people outside of the industry.  “This has allowed us to connect with a breadth of people, industries, and leaders, and to really show the connections between, and strength of, a truly sustainable economy in which businesses are focused on sustainability goals, alongside traditional profit motives,” said Chambers.
Increased CPG demand highlights need for systemic change The demand for essential items at retail this spring caused CPG supply chain strains across companies. But, those pandemic-related challenges largely didn’t disrupt manufacturers’ sustainability efforts — in fact, the pandemic has actually brought to light the urgency of sustainability issues in the industry. “COVID-19 and the increasing threat of climate change is further bringing to light the importance of building resilience and sustainable practices into the global food supply,” said Roberta Barbieri, vice president of sustainability at PepsiCo. Even during the new normal as a result of the pandemic, PepsiCo is still developing and testing new container technologies, such as compostable snack packaging, enzymatic recycling technology and the recently revealed paper – based bottle, according to Barbieri. Sustainable agriculture practices are just as important with increased demand during the pandemic; Barbieri also shared that PepsiCo is deploying technology to collect and analyze crop data. “While our global food system was under pressure before COVID-19, those pressures are even greater now,” said Barbieri. “Systemic problems require systemic solutions, and the pandemic has brought into even sharper focus the need for collective action and bold steps to address long-term sustainability challenges.” – Source: Smart Brief.

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