More than a recession

While 2009 was most notably marked as the year of the Great Recession, a handful of other events rocked the restaurant industry. From free giveaways that turned in to public relations snafus, to executives who unexpectedly stepped down from their posts, the year held a few surprises. Nation's Restaurant News lists the Top 5 surprises of the year.

1. KFC runs out of chicken … and other misadventures in the year of the freebie

In April, Yum! Brands Inc.’s KFC promoted the nationwide rollout of its Kentucky Grilled Chicken with free samples. The chain ended up having to apologize to customers in May when it couldn’t meet consumer demands after a free grilled chicken dinner offer was announced on the Oprah Winfrey Show. KFC rebounded by offering additional giveaways and customer rain checks. See coverage here [3].

KFC wasn’t the only chain to run into a few bumps in offering free food items. In February, some Denny’s franchisees said they had to issue rain checks when bad weather and traffic issues affected the chain’s approximately 2 million free Grand Slam breakfast giveaways at 1,500 stores nationwide.

In the same month, Quiznos’ offer to give away a million coupons for a free sub also created a boost in traffic that overwhelmed some franchise operators as well as frustrating guests who had to visit several locations to find a place to redeem the coupon. See coverage here [4].

2. ‘Schaich’ ups and other executive changes

In November, Panera announced that CEO Ron Schaich would step down in May, to be replaced by co-chief operating officer Bill Moreton.

While the announcement was news to the restaurant world, Schaich said he and the company’s senior management discussed the change for years. Analysts agreed the change would not cause instability, since as executive chairman Schaich would still hold influence over Panera’s strategic initiatives. The company also announced a three-year share repurchase program that analysts said is a positive sign. See former coverage here [5].

In another executive suite surprise, McDonald’s announced at the beginning of December that president and chief operating officer Ralph Alvarez would retire at the end of the month due to health reasons. Though the announcement of the sudden departure came as a surprise, securities analysts that cover the largest restaurant company were confident that McDonald’s would be able to replace Alvarez. See coverage here [6].

3. NYC Dunkin’ Donuts locations swap to Tim Hortons … and other brands test their identity

New York-based multi-concept franchisee The Riese Organization switched all 13 of its Dunkin’ Donuts stores to Tim Hortons in July, citing the end of a franchise contract. The two parties had a long history of disputes. See the story here [7].

Pizza Hut started the year by trying out a new name, “The Hut,” in signage throughout a couple of markets. The move was made to emphasize the non-pizza menu items that had grown successful for the chain, including its Tuscani pastas and Wingstop chicken wings. However, by June the company reassured concerned consumers that the chain would not be changing its name, and that “The Hut” was more a marketing moniker. See coverage here [8].

4. Full menu makeovers and other inspired items

Restaurant brands spent the year trying to boost sales, and what better way than a menu makeover.

Romano’s Macaroni Grill introduced a new dinner menu in September featuring seven new dishes and 14 reformulated items. And just two months later, continued to roll out several more items  in the continued effort to overhaul the menu by May 2010. See coverage here [9].

Wendy’s tested new breakfast items [10]to help the chain gain more favor with health-conscious consumers, including a warm multi-grain breakfast bar with apple-cinnamon flavor, as well fresh fruit smoothies. The chain eventually pulled back its breakfast menu to retest items and begin a rollout at a later date.

Hardee’s catered to recession-weary wallets with regional flavor when they introduced the Fried Bologna Biscuit [11] sandwich in August.

And ice cream chain Cold Stone Creamery further showed that coffee houses were no longer the only game in town for specialty coffees with the launch of their iced and blended coffee drinks [12] in April.

5. Steak n Shake becomes the industry’s most expensive stock

Steak n Shake Co. chief executive Sardar Biglari, also the chief executive of Western Sizzlin’ Corp., executed a 1-for-20 stock split, which ended with a closing stock price of $293.00 on Dec. 21, making it the most expensive stock in the industry. Indianapolis-based Steak n Shake is the owner to the 485-unit family-dining brand, with annual revenues totaling about $627 million. In comparison, the next most expensive stocks include Chipotle Mexican Grill Inc., at around $90 in late December, Panera at around $68, and McDonald’s at around $63.

Biglari is making moves in the restaurant industry, working to create a holding company in Steak n Shake, with its first acquisition of Western Sizzlin. While Steak n Shake saw its stock skyrocket because of the stock split, Western Sizzlin was the year’s most depressed stock, falling 27.8 percent from Jan. 2 to Dec. 24. See former coverage on Biglari’s Steak n Shake plans here [13].

Contact Sonya Moore at [email protected] [14].