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Chipotle data breach affected locations nationwide

Nation's Restaurant News - Fri, 2017-05-26 18:59

A short-lived data breach this spring affected Chipotle Mexican Grill Inc. restaurants nationwide, the company said on Friday.

The breach also affected Pizzeria Locale, the company said. Cards used at the locations between March 24 and April 18 were impacted. Chipotle initially reported the breach in April.

“Most, but not all locations may have been involved,” company spokesman Chris Arnold said in an email. And he said the locations were affected for “varying amounts of time.”

The company has set up a website with details on the breach and information for consumers. That site also includes a list of affected restaurants, which are located in all 48 contiguous U.S. states. Chipotle has also published information for Pizzeria Locale customers.

Chipotle said its investigation identified malware that was designed to access payment card data from cards used on point-of-sale devices at Chipotle and Pizzeria Locale restaurants.

The malware searched for “track data,” which sometimes has the cardholder’s name, in addition to its number, expiration date and internal verification code. That information is then sold on the black market. 

Chipotle said it removed the malware and “continues to work with cyber security firms to evaluate ways to enhance its security measures.” The company also said it “continues to support law enforcement’s investigation and is working with payment card networks.”

The breach is the latest in a string of similar incidents at restaurant chains in recent years. It also comes at a sensitive time for Chipotle, which has started generating positive sales after steep declines in 2016, following a series of foodborne illness outbreaks.

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze

Zoës Kitchen develops snack boxes, ordering platforms, delivery

Nation's Restaurant News - Fri, 2017-05-26 18:00

Zoe’s Kitchen Inc. is looking to new products like snack boxes, a revised web and mobile ordering platform, and the expansion of delivery to drive sales for the remainder of the year, executives said Thursday.

In late April, Zoës Kitchen rolled out several new items, including a quinoa salad and snack boxes, president and CEO Kevin Miles said in an earnings call on Thursday.

“Our snack boxes, at less than 445 calories each, address the growing demand for convenient, healthy, better-for-you snacking options between traditional dayparts,” Miles said. 

The three snack box offerings — Modern Mediterranean, Hummus Duo & Veggie and Balance Bites — fit busy schedules, he said.

“With only 30 days since the launch, our unit sales have outpaced our expectation,” Miles said.

Additionally, Zoës Kitchen will re-launch its web and mobile platforms later this year, Miles told analysts, the first major upgrade since they were introduced in 2012.

“The launch will enable us to bring forward a much improved guest experience and introduce new capabilities such as online ordering for catering, a revamped loyalty program and a more robust [customer relationship management] platform,” Miles said.

Online orders currently account for about 7 percent of sales mix, eclipsed by phone orders, which are close to 30 percent, he said, noting that online transactions yield a higher average check.

Zoës Kitchen is approaching delivery and might settle on a hybrid of third-party and in-house staffing, Miles said. At the end of the first quarter, the chain had expanded delivery to more than 100 restaurants.

“With little marketing around the initiative, we are pleased to have seen some locations benefit almost immediately from the offering, with both increases in average check size and transaction penetration,” he said. “We will continue to evaluate our delivery partners in terms of execution, marketing support for our brand and ultimately overall guest satisfaction with their service.”

Zoës Kitchen has tested delivery at lunch and dinner with in-house labor.

Fast casual operator Zoe’s Kitchen has had its share prices decline more than 40 percent since the August release of second-quarter earnings.

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“While the test is only in one store, we are gaining valuable operational insight and believe a hybrid approach to delivery will be important,” Miles said.

The Plano, Texas-based fast-casual Mediterranean chain lowered its revenue guidance to between $314 million and $322 million for year, from an earlier forecast of $325 million to $327 million. The company said same-store sales would be flat to down 3 percent. 

For the first quarter ended April 17, same-store sales fell 3.3 percent, includind a 4.6-percent decline in transactions and product mix and a 1.3-percent increase in menu price.

Zoës Kitchen reported first-quarter net income of $19,000, with no per-share earnings, compared with $1.4 million, or 7 cents per share. Revenue rose 12.6 percent, to $90.6 million, from $80.4 million the previous year. 

Zoës Kitchen has 219 restaurants in 20 states.

Contact Ron Ruggless at

Follow him on Twitter: @RonRuggless 

Buffalo Wild Wings fight pits recent troubles against long-term success

Nation's Restaurant News - Fri, 2017-05-26 17:29

Should Buffalo Wild Wings Inc. management and its board of directors get credit for the chain’s long-term success, or do recent problems warrant major changes?

That’s the question facing investors of the Minneapolis-based chicken wing chain, who will decide on June 2 whether to give board seats to an activist shareholder, Marcato Capital Management.

The results could be significant. Marcato wants longtime Buffalo Wild Wings CEO Sally Smith to resign. The activist has also said that the vast majority of the chain’s more than 600 company-owned restaurants should be refranchised.

The changes would dramatically shift course at Buffalo Wild Wings, which until late 2015 was among the strongest-performing restaurant companies on Wall Street. But the chain has recently struggled, frustrating investors and fueling Marcato’s dissident campaign. 

There is little question that 1,200-unit Buffalo Wild Wings helped change the face of casual dining as it grew into a national phenomenon that helped make chicken wings a sporting-event staple.

The company grew sales at an impressively consistent rate between 2003 and 2015, helping it to become the third-largest casual-dining chain in the country, surpassing older, more established concepts like Chili’s Grill & Bar and Outback Steakhouse.

Buffalo Wild Wings’ stock price quadrupled between 2007 and 2015, and the company was routinely mentioned alongside Chipotle Mexican Grill Inc. and Panera Bread Co. as the strongest performers among publicly traded restaurant companies.

For Buffalo Wild Wings, its strong performance has earned it the benefit of the doubt.

“Buffalo Wild Wings’ financial results and stock performance have led the casual-dining sector over nearly all periods since its IPO in November 2003,” the company said in a statement this week. “We believe that a couple of challenging quarters is not a good justification to ignore 50 strong quarters since 2003.”

Indeed, those challenging quarters have all been recent. Same-store sales declined each quarter in 2016 — even though Buffalo Wild Wings increased spending on labor in a bid to improve customer service.

The company’s once unstoppable stock, which hit a high of nearly $206 per share in September 2015, fell by 32 percent by July 22, 2016. Then Marcato filed documents indicating it had taken an activist position in Buffalo Wild Wings.

“Buffalo Wild Wings must make substantial changes to its business practices if it hopes to reach its full potential both as a company and in terms of shareholder value,” Marcato founder Mick McGuire wrote in a letter to the company last year.

Buffalo Wild Wings has made numerous changes in response to Marcato. The company added three new independent directors last year, and nominated another new director, Janice Fields, in April. It also endorsed Sam Rovit, president and CEO of CTI Foods. If Buffalo Wild Wings were to win the proxy, the majority of board members would still be brand new. 

Buffalo Wild Wings has also vowed to refranchise more locations. Additionally, the company has worked to improve operations and is passing more cash to shareholders through buybacks of company shares.

The proxy advisory firm Glass Lewis endorsed Buffalo Wild Wings’ board nominees on Friday. In a report, it said the company has taken significant action related to strategy, operations and leadership over the past 18 months.

“In our view, these actions suggest a newfound focus and commitment on the board of the board and management to address the underlying business and financial challenges confronting [BWW] and to re-establish the company as a top performer in the industry,” Glass Lewis said. 

But Institutional Shareholder Services, or ISS, the largest of the advisory firms that review board votes and make recommendations, endorsed three of Marcato’s four nominees. And on Friday, a third advisory firm, Egan-Jones, endorsed all four nominees, saying they would “make significant contributions to the company.”

Marcato argued that Buffalo Wild Wings has done a poor job of operating restaurants and overpaid in making some acquisitions, particularly a $160 million purchase of 41 restaurants in 2015.

The activist said Buffalo Wild Wings should quickly refranchise most of its 634 company-owned restaurants, saying the chain could reach 90-percent franchisee ownership within two years.

Speaking on CNBC this week, McGuire said refranchising would improve margins and Buffalo Wild Wings’ returns.

“This is not risky,” he said. “It’s very feasible. There’s an enormous appetite for these restaurants, both from existing franchisees in the system and operators outside the system.” 

But Buffalo Wild Wings countered that such a dramatic refranchising of a casual-dining chain, half of whose locations are company operated, is a largely unproven strategy. Even ISS questioned the proposal as it endorsed most of Marcato’s nominees. 

“Except for Applebee’s, no other casual-dining restaurant chain with similar operational complexity has over 90 percent of its units franchised,” ISS wrote. “DineEquity’s experience with Applebee’s does not appear reassuring to Buffalo Wild Wings’ shareholders.” 

The other question is the future of Smith, who has led the chain since the mid-1990s and is among the longest-tenured chief executives in the restaurant industry.  

McGuire told CNBC: “The issues the company faces would probably benefit from leadership expertise both in turning around and improving operations of restaurant businesses, but also one that has more experience growing and building a more highly franchised system.”

But Buffalo Wild Wings countered that Smith has been good for shareholders and has generated strong returns. 

“Over the past decade, Buffalo Wild Wings’ performance has consistently led the casual-dining industry, delivering superior results to our shareholders while providing a differentiated guest experience to our customers,” the company said in April. “The company has continued to innovate and pursue cost-savings initiatives amid difficult market conditions for the sector, and remains focused on creating sustainable value for our shareholders.” 

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze

Taco Bell unveils plan to hit $15B in annual sales

Nation's Restaurant News - Fri, 2017-05-26 16:26

Taco Bell Corp. aims to add approximately 2,350 restaurants worldwide by 2022, a move that will boost annual sales from $10 billion to $15 billion, the company said Thursday.  

Part of the expansion will include a focus on Brazil, Canada, China and India, with at least 100 restaurants slated for each market.

“We have tremendous potential to continue to grow this brand domestically, as well as globally, with our world-class franchise system,” said Taco Bell CEO Brian Niccol in a statement.

“We are already off to a great start by continuing with breakthrough menu innovation, digital innovation and diversifying our development portfolio,” he said. “Our new and remodeled restaurants deliver a Taco Bell ‘category-of-one’ brand experience for suburban, urban and rural markets.” 

Mark Kalinowski, managing director of Nomura, shared Niccol’s optimism in a report Friday. 

“In more recent performance, Taco Bell's same-store sales have outperformed those of the larger quick-service sector by an average of three percentage points since the third quarter of 2015,” Kalinowski wrote. “Over the five years 2012-16, the average annual same-store sales number for Taco Bell is +4%, for KFC U.S. is +2%, and for Pizza Hut U.S. is 0%.” 

Between 2012 and 2016, Taco Bell opened 600 net new restaurants in the U.S. Internationally, the chain has 350 restaurants in 22 countries. 

Irvine, Calif.-based Taco Bell aims to do business in more than 40 countries by 2022, and targets approximately 9,000 locations. Currently, the chain has more than 6,650 units worldwide. 

Taco Bell is a subsidiary of Yum! Brands Inc. 

Contact Dan Orlando at

Follow him on Twitter: @danamx

Wolfgang Puck wins IFMA Gold Plate Award

Nation's Restaurant News - Fri, 2017-05-26 15:12

Wolfgang Puck has won the Gold Plate Award from the International Foodservice Manufacturers Association.

The prize is granted to one of eight Silver Plate winners who are nominated by IFMA members and industry leaders, and selected by a jury of foodservice experts, past winners and the national foodservice trade press. The jury votes on which of those winners to bestow the Gold Plate.

The awards, now in their 63rd year, honor operators who have contributed to the advancement of their segments and to the foodservice industry as a whole, according to IFMA.

Puck, a celebrity chef and restaurateur based in Los Angeles, has long been a force on the national dining scene.

A native of Austria, Puck arrived in the United States at the age of 24, and soon gained critical acclaim in the 1970s as chef of Ma Maison in West Hollywood, Calif. He went on to open Spago in Beverly Hills, where he introduced the city to open kitchens and fine-dining pizza, and spent years as the impresario of a star-studded restaurant scene. Meanwhile, at Chinois on Main, he broke new ground by incorporating the cuisines of LA’s Asian communities in a fine-dining setting.

He has gone on to open restaurants across the country, including fine-dining restaurants, steakhouses, a casual-dining chain and a fast-casual chain.

Puck also operates a catering arm and sells consumer products including cookware and frozen pizza.

He has won numerous national awards, including the James Beard Foundation’s Lifetime Achievement Award and induction into Nation’s Restaurant News’ MenuMasters Hall of Fame.

“It is indeed a great pleasure to be here and recognized,” Puck said in his acceptance speech. “I’m so proud, and to me the whole thing is like a dream.”

Puck had won the Silver Plate in the category of independent restaurants and multi-concept operators.

The other Silver Plate winners are:

• G. J. Hart, executive chairman and CEO of California Pizza Kitchen, in the full-service chain category 

• Chris Newcomb, co-founder, president and CEO of Newk’s Eatery, in the limited-service chain category 

• Chris Gheysens, president and CEO of Wawa Inc., in the retail and specialty foodservice category

• Patti Oliver, director of nutrition for UCLA Health, in the health care category

• Betti Wiggins, executive director of the Office of School Nutrition for Detroit Public Schools, in the category of elementary and secondary schools

• Jeff Metz, president and CEO of Metz Culinary Management, in the category of business & industry/foodservice management  

• Ted Faulkner, director of dining services at Virginia Tech, in the colleges and universities category. 

Contact Bret Thorn at

Follow him on Twitter: @foodwriterdiary

There’s No Place Like Home

Hotel Interactive - Fri, 2017-05-26 13:51
Choice’s New MainStay Suites Prototype Designed For Added Guest Comfort

Fast-casual chains are getting squeezed

Nation's Restaurant News - Fri, 2017-05-26 13:47

This post is part of the On the Margin blog.

The fast casual sector is, supposedly, a “disruptive” force in the restaurant industry, pulling consumers away from traditional chains while promising higher quality food from a faster business model. 

But that disruption doesn’t mean they’re immune from all the other issues afflicting the restaurant industry at the moment. Indeed, they seem to be hitting fast casual chains harder.

In the first three months of the year, publicly traded fast casual chains averaged a same-store sales decline of 1.6 percent.

If we remove Chipotle Mexican Grill Inc. and its 17.8 percent number, however, that average is a decline of 3.3 percent. In other words: Fast casual chains not recovering from a major foodborne illness outbreak are losing customers.

Only three chains, Panera Bread Co., Chipotle and Habit Restaurants Inc. reported a positive number.

In a notably weak period for restaurants, the fast casual sector was the worst. That 3.3 percent, non-Chipotle decline was lower than every other sector. Even casual dining performed better than did fast casual concepts.

To be sure, one quarter is just that, one quarter. Yet trend lines in that business have been heading downward for some time. Broader numbers have not been much better, either.

It’s risky to make generalized trends in the fast casual business. Few of these chains are very large, and the largest of them — Panera and Chipotle — have long, well-established track records.

Many of the rest are younger, smaller chains or regionals at best where volatility can be expected. Many are coming off strong quarters from a year ago and simply felt the impact of tough comparisons and bad weather.

Yet it’s also possible the casual dining and quick-service sectors have both adapted to the presence of fast-casual chains.

“Over the last five years, full service has been pricing down, and quick service has been qualitying up,” Robert Baek, vice president of operations with the fast-casual pizza chain PizzaRev, said at the NRA Show last weekend. He suggested, therefore, that fast casual chains are getting squeezed, as both casual dining and quick-service concepts up their games. 

Quick-service concepts have been moving to make their food more amenable to consumers at more reasonable price points — Del Taco Restaurants Inc., for instance, has added higher-end menu items, bolstering its own sales.

McDonald’s Corp., meanwhile, pushed its Big Mac hard in the first quarter and now has semi-customizable, Signature Crafted sandwiches on its menu. “We’ll be the better burger chain,” CEO Steve Easterbrook declared earlier this year. 

Pricing is another potential problem in the sector. Fast casual chains have been quick to raise prices in recent years, and consumers over time notice that — especially when the prices at the grocery store have been falling.

Quick-service concepts, meanwhile, have done an excellent job recently of innovating to get customers’ attention. Taco Bell generated an 8-percent same-store sales number in the first quarter thanks to its Naked Chicken Chalupa. Arby’s has been attracting customers by doing things like selling sandwiches made from venison or pork belly. 

Fast casual chains, with their smaller sizes, smaller menus and smaller marketing budgets, haven’t been able to do that. And they’ve often eschewed such ideas, anyway.

None of this is to say that fast casual is suddenly dying and losing the battle. The fact is, the industry is in a challenging, competitive market at the moment. Things like weather, and retail traffic, low grocery prices and Netflix are all influencing consumer decisions.

But recent quarters have proven that fast casual concepts can’t simply expect to open their doors and watch customers flood in. And despite their enormous growth, they have to adapt to meet a changing consumer just like everybody else.

Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company. 

Contact Jonathan Maze at

Follow him on Twitter at @jonathanmaze

Innovation on display at NRA (part 2) - Fri, 2017-05-26 11:57
It's almost impossible to see the two-miles of products and services at the NRA show, so in this two-part series, FastCasual highlights several that made their debuts at the show.

Home2 Suites by Hilton Nokomis Opens

Hotel Interactive - Fri, 2017-05-26 07:23
MCLEAN, VA––Home2 Suites by Hilton, part of Hilton's (NYSE: HLT) All Suites portfolio, announced today its newest property, Home2 Suites by ...

Aloft Perth Hotel Opens, Marking The Debut Of Marriott International's Different-By-Design Brand In Australia

Hotel Interactive - Fri, 2017-05-26 05:19
PERTH, AUSTRALIA–-Marriott International today announced the official opening of the design-led Aloft Perth Hotel, the first Aloft to open in Australia. ...

What does a McDonald’s comeback mean for competitors?

Nation's Restaurant News - Thu, 2017-05-25 20:35

Investors are betting that McDonald’s Corp. will regain the customers it has lost since 2012, which could be bad for the rest of the restaurant industry.

The Oak Brook, Ill.-based chain’s stock has risen 23 percent so far this year, and hit an all-time high of $149.99 per share this week. Investors are buying into the idea that McDonald’s will show strong sales as the year goes on, thanks to efforts to improve both the food and the experience in its restaurants.

But a reinvigorated McDonald’s could have a significant impact on the rest of the industry, and especially on quick-service restaurants, simply because of its immense size.

“It could be negative for the other players in the industry,” said Carla Norfleet Taylor, restaurant analyst for Fitch Ratings.

With 14,000 restaurants and average unit volumes in excess of $2.5 million, McDonald’s is by far the largest restaurant chain in the country. Despite losing 500 million transactions since 2012, the company remains more than twice the size of its next largest competitor in terms of system sales.

To put it another way, McDonald’s business is roughly the size of Starbucks, Subway and Taco Bell, combined. 

Even in the quick-service burger category, one of the largest and most established segments in the restaurant industry, McDonald’s market share is immense. It accounts for more than 46 percent of the share of the country’s largest burger chains, according to NRN Top 100 data.

McDonald’s has lost some share in recent years amid sales struggles, while competitors gained ground. Earlier this year, McDonald’s executives said much of the 500 million transactions it lost were to its more immediate competitors in the quick-service burger segment.

The company has worked feverishly to regain those transactions, and has generated some momentum under CEO Steve Easterbrook.

McDonald’s U.S. same-store sales grew 1.7 percent in the first three months of the year, an increase that surprised analysts who expected a pullback due to difficult comparisons from the previous year. Instead, McDonald’s was the strongest performer among limited-service burger chains during a difficult market.

What’s more, there’s a sense that the company can continue its momentum as the year goes on, thanks to easier comparisons and various strategies the chain is using to get customers in the door.

McDonald’s introduced its Signature Crafted line of sandwiches last month, to great fanfare. The company has gained some traffic by offering $1 drinks nationwide.

The company is rapidly expanding delivery, now offered in more than 1,000 locations, and plans to add mobile order and pay — as well as curbside service — in the remainder of the year. 

In the coming years, McDonald’s expects to add kiosks at restaurants across the country in what it calls the “Experience of the Future,” and next year it will start making Quarter Pounder burgers with fresh beef, made to order. The chain also wants to bolster its McCafé line. 

In a report on consumer business sectors on Thursday, Fitch Ratings said it views McDonald’s efforts positively. But the service also said it expects volatility in the chain’s same-store sales due to heightened competition. 

Still, Norfleet Taylor suggested that McDonald’s could boost its market share as Walmart is doing in the retail world — by flexing its considerable financial muscle.


“Conventional wisdom in the industry says that if you have a big share of the market, you’re bound to lose some share,” Norfleet Taylor said. “Yet Walmart is gaining share. They’re leveraging their financial strength by reducing prices to make themselves more attractive to consumers. McDonald’s has a lot of the same ability to do that.” 

Other analysts certainly appear to be on board. According to Nasdaq, 14 analysts have “Strong Buy” ratings on McDonald’s stock, and one has a “Buy” rating. By comparison, eight analysts have a “Hold” rating on McDonald’s stock, and none suggest that investors should sell the stock.

Sara Senatore, an analyst with Bernstein Research, is bullish on McDonald’s stock, and has a price target on it of $170 per share. She suggested that another McDonald’s strategy, an expected launch of a loyalty program in 2018, could generate further sales momentum by improving customer frequency.

“McDonald’s higher average frequency and lower average check make it better suited to loyalty than many other concepts,” Senatore wrote in a note this week.

To be sure, not everyone said McDonald’s success will result in poor results everywhere. That includes Wall Street. For instance, Wendy’s stock has risen 22 percent this year. And stock in Burger King owner Restaurant Brands International Inc. — which swallowed the chicken chain Popeyes Louisiana Kitchen this year — has increased 28 percent.

In an earnings call earlier this month, Wendy’s CEO Todd Penegor dismissed suggestions that McDonald’s fresh beef move next year will hurt the chain’s sales. In fact, he expects it to help Wendy’s sales.

“It does create more awareness,” Penegor said. “It adds some credibility to what we’ve been saying for almost 40 years.”

To be sure, McDonald’s has a long way to go to improve consumer views of its brand. The company is intent on changing that perception. It removed artificial ingredients from its Chicken McNuggets last year, and did the same with its ice cream this year, while also shifting to cage-free eggs.

But McDonald’s remains near the bottom of many consumer rankings of restaurant chains. To regain share, the company needs to strengthen its brand image with younger consumers, Norfleet Taylor said.

“That still hasn’t occurred,” she said. “And McDonald’s may have a more difficult shot at that. It’s more difficult for McDonald’s to do that than it is for Walmart.”

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze

5 reasons independent restaurants are winning

Nation's Restaurant News - Thu, 2017-05-25 20:29

This post is part of the On the Margin blog.

Traffic at restaurant chains has been increasingly problematic in recent years, and has fallen at least 4.2 percent on a two-year basis in four of the past five months, according to MillerPulse. 

One reason for the decline is that consumers are broadening their spending, especially at dine-in concepts where prices are higher.

The beneficiary of this is the independent restaurant. As my colleague Lisa Jennings reported last week, independents are expected to gain market share in the coming years, and will grow at a higher rate.

To be sure, it’s difficult to truly get a handle on shifts in the independent market, and there’s some disagreement among experts as to whether independents are really gaining market share. 

But there are five reasons why I think independents can get a leg up on chains for the first time in many years:

1. Younger people like local. This cannot be emphasized enough. Large chains can tout their local ingredients all they want, but they will have only so much credibility with consumers. Independents have no such problem. “Millennials are the largest customer base out there,” small business advocate Rhonda Abrams said at the NRA Show, “and they like to shop local.”

2. Chain profit pressures. If chains are losing share, a lot of it is their own doing. Over the past decade, many chains have relied on discounts and lower-cost items to get customers in the door. But they’ve also faced higher food and labor costs in the process. So what to they do? Cut food quality, portion sizes or service. And the worst ones delay maintenance on buildings. Consumers notice these issues over time, and they opt to go elsewhere.

3. Television. I have a confession: My family loves watching "Diners, Drive-ins and Dives" on Food Network, so much so that we will routinely seek out restaurants in Minnesota that the show features. There are countless other shows on Food Network, Cooking Channel and other channels highlighting interesting local restaurants. Much like HGTV has impacted the way consumers buy houses, Food Network has impacted the way diners pick restaurants.

4. Delivery. Consumers clearly want food to be delivered directly to them. It’s the biggest single trend in the industry, and every decent executive in the business is at least studying the issue. But I still say that delivery favors the independent restaurant. Diners have demonstrated a willingness to pay higher prices for local cuisine. And delivery wipes out the convenience advantage that many chains enjoy, particularly in the casual-dining segment.

5. Social media. Ratings services and social media word-of-mouth advertising are erasing the messaging advantage that chains have historically boasted. Reviews on Google and Yelp remove the risk factor associated with picking an unknown local restaurant. Social media spreads the word about these restaurants more efficiently. Abrams highlighted a number of strategies innovative local concepts have used to get nearby customers to come to in their doors using Facebook.

None of this is to say that chains can’t gain market share. They can, as Olive Garden, Dave & Buster's and Texas Roadhouse can attest. But general trends suggest that independents have advantages in the battle over the consumer dollar that they haven’t had since, well, ever.

Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company. 

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze

Restaurant CEO pay rises with stocks

Nation's Restaurant News - Thu, 2017-05-25 19:44

With stock prices on the upswing, restaurant companies were feeling generous last year.

The typical restaurant industry CEO received a pay increase of 2.5 percent in 2016, according to a Nation’s Restaurant News analysis of pay packages for CEOs at publicly traded companies. 

Restaurant stocks finished up 2.8 percent in 2016, and the companies whose CEOs we analyzed for this story had a median increase of 6.8 percent.

Read more: How much did restaurant CEOs make last year?

But pay hikes in the corner office varied greatly — a reflection, perhaps, of a great divide in industry performance. Indeed, CEOs of the largest companies seemed to benefit the most last year.

Consider this: Yum! Brands Inc. CEO Greg Creed and McDonald’s Corp. CEO Steve Easterbrook received the two largest pay increases among CEOs in the job at least two years.

Creed’s pay more than doubled, to $15.4 million from $7.5 million. Easterbrook’s pay jumped more than 94 percent, to $15.4 million in 2016 from $7.9 million the year before — though Easterbrook was not CEO for the full year in 2015. 

The higher pay, especially for executives with the largest chains, followed overall business trends. Median pay for the executives at the 104 largest U.S. companies increased 6.8 percent last year, according to the Wall Street Journal.

This NRN list analyzes the pay packages of CEOs at 36 restaurant companies that did not make a change in the middle of the year in 2016, which factors out partial year pay packages.

So the list does not include a number of chains that struggled and made CEO changes, like Noodles & Co., Fiesta Restaurant Group Inc., and Famous Dave’s of America Inc. 

And this analysis does not include The Wendy’s Co. CEO Todd Penegor, who received more than $5.1 million, but was not the CEO for the full year. In addition, pay for the CEOs of Popeyes Louisiana Kitchen and Panera Bread Co were not available, because the companies have been purchased.

The average pay package for the 36 CEOs with their companies for at least two years was $5.6 million, up from $5.2 million a year ago.

Twenty of the 36 CEOs received raises. But the highest paid CEOs received the largest pay bumps. The 15 CEOs who received packages worth $5 million or more received an average pay increase of 21 percent.  For those who received less than $5 million, pay declined an average of 6 percent.

Salary makes up a small part of a typical CEO’s pay package — less than $900,000 of the $5.6 million was in the form of salary, on average. 

The rest of that $5.6 million comes in the form of stock, stock options and bonus and incentive pay. Only $1.3 million of Easterbrook’s $15.4 million package, is in the form of salary, for instance.

Five CEOs received total pay packages of $15 million or more, including both CEOs at Chipotle Mexican Grill Inc., Steve Ells and Monty Moran, who received more than $15 million apiece. Ells’ pay jumped 13 percent in 2016, while Moran’s pay increased 14 percent — even though Chipotle’s stock price fell by 21.5 percent in 2016. 

The highest paid CEO in the restaurant industry, once again, was Starbucks Corp. CEO Howard Schultz, whose pay increased 8.6 percent to $21.8 million in his final year overseeing day-to-day operations at the coffee giant.

Not included in the ranking, however, is Sardar Biglari, the CEO of Biglari Holdings and owner of Steak ‘n Shake. Biglari receives a $900,000 salary as CEO, but his private-equity firm, Biglari Capital, received a $31.6 million incentive from the company — a $32.5 million total package that would make Biglari the highest paid CEO in the industry.

We opted not to include Biglari, given that his company operates more like a private-equity group, and because of the complexities of his pay package.

On the other end are pay decreases for CEOs of struggling companies that have since made changes at the corner office.

That includes DineEquity Inc., the owner of Applebee’s and IHOP. Julia Stewart saw pay fall by 22 percent last year to $4.5 million, Ruby Tuesday Inc. CEO JJ Buettgen, meanwhile, received $2.3 million in the company’s 2016 fiscal year, down 40 percent from the year before. Buettgen has since left the company, which is up for sale.

Papa Murphy’s Holdings, meanwhile, let go of its CEO, Ken Calwell at the end of a difficult 2016 in which the chain’s sales had fallen steeply. His pay package fell by 23 percent.

To be sure, sometimes pay packages change for one-time reasons. At Ruth’s Hospitality Group Inc., CEO Michael O’Donnell in 2015 received one-time awards that he did not receive in 2016, and so his pay fell by 61.25 percent to $2.8 million. His pay in 2016 was more indicative of his historic pay package, than the $7.7 million he received in 2015. 

And Shake Shack Inc. CEO Randy Garutti’s pay package fell by 82 percent to $1.2 million. Garutti received $5.9 million in option awards in 2015 that he did not receive in 2016.

Contact Jonathan Maze at

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Nutella spreads its reach with new café

Nation's Restaurant News - Thu, 2017-05-25 17:54

Ferrero USA Inc. will open its first Nutella Café, highlighting its chocolate-hazelnut spread, on May 31, in Chicago.

The Parsippany, N.J.-based company, whose products also include Ferrero Rocher chocolates and Tic Tac mints, said the new Nutella Café will offer coffee, lunch items and a number of to-go options.

Ferrero has had a Nutella Bar for several years in Chicago’s Eataly food and restaurant market, but this is the company’s first standalone café.

“We wanted to create a world of Nutella for our fans that could truly capture the essence of the brand — not just in the dishes that will be served, but in the full experience from the moment you step into the space." said Noah Szporn, head of marketing for Nutella North America, in a statement.


Even the entryway that faces Chicago’s Michigan Avenue features architectural outlines and lighting shaped like the signature, squat Nutella jar and its round lid. The new café is a block from the city’s Millennium Park. 

Ferrero said the menu will include exclusive items such as grilled baguettes with Nutella, freshly roasted hazelnut and blueberry granola with yogurt and Nutella, and Italian specialties like "panzanella" fruit salad and gelato affogato topped with Nutella.

The company said a number of menu items will be available without Nutella, such as panini and salads.


"The Nutella Cafe offers something for everybody, and we encourage everyone to come in and try a dish or snack,” Szporn said. “We hope Nutella enthusiasts, Chicagoans and visitors enjoy the café as much as we enjoyed creating it."

The café will officially open on Wednesday, with an event including chef Rocco DiSpirito.

Nutella was created in Italy and debuted in the United States in 1983. The spread is available in about 160 countries. 

Contact Ron Ruggless at

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Chefs celebrate berry season with strawberry shortcake

Nation's Restaurant News - Thu, 2017-05-25 17:32

A sure sign that summer is imminent is the proliferation of strawberry shortcake on menus. This year, chefs are celebrating the arrival of berry season with familiar and innovative versions of this classic dessert.

“With desserts, people want something that’s a little bit different,” said Anthony Alberin, executive pastry chef at Coffeemania, a Euro-Russian eatery in New York City. “For me, traditional ideas are boring. I want to see something more.”

Alberin’s “something more” is called Love Me, Love Me Not, an intricate take on classic strawberry shortcake. The dessert, which is evocative of a flower, is made with wild strawberry mousse with a mixed berry gel inside, on top of a shortcake base. It’s finished with a white chocolate and cocoa butter spray to give the exterior a velvety look.

“When you look at the display, it definitely stands out,” said Alberin of his bestselling dessert. “It’s strawberries — everybody loves strawberries.”

Also looking to make a strawberry standout is DaVee Harned, pastry chef at Pawpaw in Charleston, S.C. Harned’s creation features a lemon poppy seed bundt cake for the shortcake and first-of-the-season strawberries macerated with brown sugar, served with a side of basil ice cream. 

“It's just super light and fresh,” Harned said. “It also just puts a different twist on something that is very traditional. I wanted to have something that you can't get everywhere else."


At Halifax in Hoboken, N.J., pastry chef Stuart Marx adds height and an unexpected crunch to the summer favorite. His strawberry shortcake is made with three layers of vanilla spongecake, each brushed with a strawberry sauce that also contains lemon and sugar, then coated with graham cracker crumbs and topped with fresh and pureed strawberries and pistachios. It’s served with vanilla whipped cream and a scoop of roasted pistachio ice cream.

“My style is classic with a twist, so I knew I wanted to do a version of strawberry shortcake,” Marx said. “Plus, strawberry and pistachios is one of my favorite combinations since childhood. The flavors go perfectly together.”

And at the Tuck Room Tavern in Westwood, Calif., chef Sherry Yard serves a deconstructed strawberry shortcake: She places Harry’s Gaviota strawberries, Scottish shortbread and Bellwether Farms whipped cream in a decorative glass.

Chains are serving up strawberry shortcake, too. From June 19 to the end of August, Buffalo Wings & Rings, the 55-unit, family-friendly sports bar chain, will serve a cookie shortcake base dusted in powdered sugar and topped with vanilla ice cream, strawberries that will be locally sourced by each franchisee, and whipped cream.

Shortcake is resonating so strongly that some pastry chefs, like Amy Beeman of The Rieger in Kansas City, are finding creative ways to menu it even before strawberries comes into season near them.

“Shortcakes are kind of everywhere now,” Beeman said. “I love nostalgic desserts, things that remind you of your childhood. Strawberry shortcake is that for me.”

Despite fresh strawberries not yet being available near Kansas City, Beeman is whipping up a spin on the nostalgic dessert that has a similar taste and texture but takes advantage of another in-season favorite: rhubarb.

Beeman’s rhubarb shortcake is made with buckwheat shortcakes that are split open and filled with rhubarb puree. That’s topped with orange blossom pastry cream and finished with fleur spice (a mixture of pink peppercorn, hibiscus, rose petals and mint), and served with a side of poached rhubarb. The combination of the ingredients makes “everything pink and springy,” Beeman said. 

Cicis names Billie Jo Waara CMO

Nation's Restaurant News - Thu, 2017-05-25 16:47

Cici Enterprises LP, parent to the Cicis buffet pizza chain, has named Billie Jo Waara as chief marketing officer, the company said Wednesday. 

Waara, who most recently served as CMO of Cheyenne, Wyo.-based Taco John’s, succeeds Sarah McAloon, who left Cicis in March to join Del Frisco’s Grille.

“Billie Jo has an outstanding track record of working with transforming brands, and we are confident in her ability to keep the Cicis success story moving forward,” said Darin Harris, CEO of Irving, Texas-based Cicis, in a statement.

Waara is credited with digital initiatives and culinary innovation at 400-unit Taco John’s.

“Cicis is alive and relevant again, and it’s a dynamic time to join the company,” Waara said in a news release. “I am becoming part of an incredible team and look forward to working with them to build upon their success and continue growing our brand.”

In the upcoming Nation’s Restaurant News Top 100 census, Cicis booked an estimated $449.7 million in sales for the fiscal year ended December 2016, rising from $440.1 million in fiscal 2015.

Cicis, founded in 1983, has about 430 restaurants in 32 states.

Contact Ron Ruggless at

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Advisory firm endorses Buffalo Wild Wings shareholder

Nation's Restaurant News - Thu, 2017-05-25 15:03

A proxy advisory firm has recommended that Buffalo Wild Wings Inc. shareholders vote for a trio of board nominees recommended by an activist investor, potentially paving the way for major changes at the board and at the company.

Institutional Shareholder Services has recommended that the Minneapolis-based company’s shareholders vote for former Pizza Hut CEO Scott Bergren as well as Mick McGuire, managing partner of activist investor Marcato Capital Management.

ISS also recommended that shareholders put Sam Rovit, CEO of food maker CTI Foods, who both Marcato and Buffalo Wild Wings endorsed. And the service recommended former McDonald’s Corp. executive Janice Fields get a seat.

Rovit, Bergren and McGuire will give Marcato “a sufficient voice to continue to push for appropriate changes at the company,” ISS said.

Marcato “has presented a compelling case that additional change is warranted at this time,” ISS said in its report.

Buffalo Wild Wings stock rose 8 percent on Wednesday.

“We are pleased that ISS recognizes further change on Buffalo Wild Wings’ board is needed and greater shareholder oversight will help increase accountability and avoid any delays in the implementation of strategic projects,” McGuire said in a statement.

ISS’s recommendations would further a general overhaul of Buffalo Wild Wings’ board, and would remove two of three directors who have been on the board for more than a year.

“If shareholders follow ISS' recommendation, there will be only one independent director on the Buffalo Wild Wings Board that has served for longer than eight months,” the company said on Wednesday. “We are surprised that ISS did not even consider the fact that its recommendation would essentially empty the boardroom of all independent institutional knowledge.”

ISS the best known among proxy advisory firms, who make recommendations to shareholders over corporate governance issues. Many institutional investors rely on these recommendations, and so they can have a big impact on the results of board elections such as the proxy fight between Buffalo Wild Wings and Marcato.

Marcato recommended four people to the Buffalo Wild Wings board. One of those four includes one of the chain’s former executives, Lee Sanders, whose nomination has been subject to a particularly forceful challenge from the company.

Buffalo Wild Wings has argued Sanders has exaggerated his role at the company. And earlier this week, the company said Sanders has been sending emails and texts to the chain’s franchisees as recently as February, offering to buy their restaurants.

The proxy vote could have major implications for Buffalo Wild Wings’ future and its direction. Marcato has called for the resignation of the chain’s longtime CEO, Sally Smith.

It also believes that the company should rapidly refranchise the vast majority of its more than 600 company locations, and that sales of those locations would take two years or less. Buffalo Wild Wings has argued such a strategy is too aggressive. The company plans to refranchise 80 locations, or 13 percent of its 634 company locations.

Fast refranchising deals are not uncommon, especially these days. But ISS did warn in its report that such quick changes are rare in casual dining, with only Applebee’s having done so that quickly.

“It appears unwise [for Buffalo Wild Wings] to fully commit to such a specific level of franchising at this point,” the report said.

Mostly, however, the proxy fight has been over the company’s performance under current management, with Marcato arguing that the company has lost its way over the past two years. ISS agreed with Marcato that the company has underperformed other restaurants, in terms of returns to shareholders.

ISS argued that Buffalo Wild Wings aggressively increased costs in 2015 as it faced commodity pressure, which hurt traffic in the long run. It then says the company bought restaurants in 2016 to sustain topline growth. That hurt profit margins and the company’s returns on its investments.

ISS also argued that many of Buffalo Wild Wings’ recent decisions “have been driven by [Marcato’s] engagement with the company,” the report said.

Contact Jonathan Maze at

Follow him on Twitter: @jonathanmaze