Special Report
Leaders weigh menu pressures from regulators, diners
ORLANDO, FLA. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Ellen Koteff, editor of Nation’s Restaurant News, moderated the panel of NRN Hot Concepts! winners, who addressed a wide range of topical issues, including real estate, the economy, concept longevity and how best to handle crises, such as the recent rat infestation caught on videotape at a restaurant in New York City. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Weighing in were John T. Bettin, president of Buca Inc. of Minneapolis; Eric Ersher, managing partner of Zoup! Fresh Soup Co. of Southfield, Mich.; Enrique “Rick” Silva, president and chief executive of Checkers Drive-In Restaurants Inc. of Tampa, Fla.; and Blaine Sweatt, president of new business development for Orlando, Fla.-based Darden Restaurants Inc., which developed the Seasons 52 concept. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
“The reality is that it’s a great testament to how delicate our business can be,” said Silva of Checkers. “It’s the details that can create an incredibly graphic and incredibly disgusting situation. It sends a chill down all of our backs.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
He added, “Our franchisees are our business partners. We owe them double duty. We must make sure we enforce the standards, and we need to help them.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Darden’s Sweatt said the New York rat incident relates to the broader issue of crisis management. “When it does happen, you need straightforward communication with everyone involved,” he said. “These issues are going to happen.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Bettin of Buca agreed, noting: “You can’t turn the clock back. You have to deal with it and be straightforward.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Setting up lines of communication is important, he added. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
“In all crisis management you should have a central spokesperson, and all communications should go through that person,” Bettin said. “In this case, the issue was bigger than the franchisee and went to the whole brand. It was probably appropriate for corporate to take that role.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
With recent turmoil in the stock markets and discussions of economic uncertainties, Koteff asked the panelists whether they were worried about a recession. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
“It is important to always be prepared,” Silva said. “As our guests become more sensitive to value, we need to adjust. We partner with our suppliers to find the best way to get there.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Bettin said it’s important to always be on top of your business. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
“Whether it’s a recession or a high-growth economy, if you are waiting for either one to take a look under the microscope at your business, you are waiting too long,” he said. “We always have to look at ways to be more efficient so we can avoid raising prices. With efficiency, when times are bad you don’t have to make cuts and when times are good results go to the bottom line. More than anything else, you have to know how well your operations are executed.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
He said he worries most about employees losing passion for the business and the brand. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Sweatt said recessions are part of growth. “It will happen sooner or later,” he said. “But you must develop trust with your customers.… You need to be known as the best deal that customers can get.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Ersher of Zoup said he’s confident that there is always trading up and trading down. “We just have to focus on what we do and focus on our game, and do it very, very well,” he said. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
High real estate prices also are a topic of concern among growing restaurant companies, the panelists said. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
“Real estate prices are absolutely out-of-control crazy,” Silva said, adding that Checkers’ modular units have helped to lower costs. “Real estate prices have also forced all of us to reconsider our concepts’ unit economics,” Silva said. He noted that although Checkers has positioned itself as a double-drive-thru chain, the company now is testing end caps with single drive-thru lanes. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Bettin said Buca “built too many restaurants that were too big.” The company has a number of 10,000- to 12,000-square-foot restaurants in its portfolio, he said. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
“They were packed on Fridays and Saturdays, but were three-quarters empty” the rest of the week, Bettin said. “We have a lot of underutilized assets right now.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Future restaurants will be smaller, he noted. “We’d rather be in the situation where we run out of capacity in certain time slots than have an underutilized asset,” Bettin said. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
The two most important variables for success are operations and location, Ersher said, “so the site-selection piece is the huge challenge.” Zoup recently began using demographic modeling to help in site selection, he said. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Keeping the spark in a concept is a perennial challenge, the panelists said. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Sweatt, who noted that Seasons 52 has seven units in Georgia and Florida and is looking at other Eastern Seaboard locations, said that developing a new concept is not easy. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
“To find something that makes more money than what you are already in, something that’s unique and is also going to have the legs to be around 25 years, there aren’t a lot of these concepts lying around,” he said. “Every now and then you find something like Seasons 52 and test it to make sure we don’t plow $100 million or $200 million into something that is going to be challenged two or three years out.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Bettin noted that Buca is in a turnaround situation. “Buca continues to be hot,” he said, “but coming in as one of the new guys the challenge is to make sure you don’t tamper with the soul of the concept, yet find out why it’s not working and what needs to change. Our primary focus is really increasing frequency by improving accessibility.” —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Buca’s shared-dining concept has been limiting, he said. Three years ago, the company introduced Buca Small, which is intended to serve two to three people rather than larger numbers. “Buca Small now makes up 60 percent of all the items sold,” Bettin said. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.
Last year, the company rolled out lunch service to 80 percent of the system as well. “That was our first foray into single portions,” Bettin said. The company is testing that further, he noted. —Crisis management must be an integral part of any restaurant’s business strategy, said participants on the Hot Concepts! panel during this year’s Chain Operators Exchange held recently here.