First Bite

Bankruptcy filings, no matter the industry, are the result of a thousand cuts.

This month has produced filings and rumors of more to come in the pandemic-shaken restaurant industry.

Maitland, Fla.-based Tijuana Flats Restaurants filed for Chapter 11 protection in the Florida Middle District Bankruptcy Court after closing a total of 40 restaurants this year, 11 of them last week.

And, while Tijuana Flats is in the fast-casual segment, North Aurora, Ill.-based Oberweis Dairy filed April 12 for Chapter 11 bankruptcy reorganization at the 43-unit dairy and retail concept.

And Bloomberg reported April 16 that Orlando, Fla.-based Red Lobster, a stalwart in the casual-dining segment, was talking with experts about a possible bankruptcy filing. The company named Jonathan Tibus, known for his restructuring expertise, as CEO in late March.

Senior editor Ron Ruggless helps us make sense of it all.

Who has power in the restaurant industry? What does power really mean when it relates to one of the largest industries in the country, one that employs more than 12 million Americans this year and will achieve roughly $1 trillion in annual sales?

The answer is always shifting, and Nation’s Restaurant News’ annual Power List has evolved alongside it, recognizing everyone from chief executives to tech entrepreneurs to general managers. This year, though, a clue can be found in the official definition of power: “possession of control, authority, or influence over others,” according to Merriam-Webster.

Influence. With influence comes power, and increasingly a horde of social-media users are gaining power by capturing consumers’ attention and driving their purchasing decisions.

Last week, we talked about the tech takeaways from the Restaurant Leadership Conference. Today, executive editor Alicia Kelso is joining us to talk about her takeaways.

The main takeaway is labor. There was a lot of discussion about labor and wages against the backdrop of California’s AB1228 which went into effect earlier this month, raising the minimum wage to $20 an hour. One operator told Alicia he’ll “never” expand in California again, while another felt confident about the combined pricing and technology strategies her team has put into place to soften the inflationary blow. We’ve seen plenty of stories so far about layoffs and kiosk implementations and even menu adjustments to navigate these higher wages, but time will tell how it ultimately shakes out. Will this $20 watermark trickle beyond QSRs? Likely. Other markets? Maybe. Will California’s restaurant growth stagnate a bit? Perhaps among smaller players, but not likely among the bigger players who have the advantages of scale to absorb the higher costs.

This week, several editors here at Nation’s Restaurant News attended the Restaurant Leadership Conference or RLC in Arizona. The conference gathers top leadership at restaurant companies for discussions, networking, and sessions.

Senior editor Joanna Fantozzi was there are had some key takeaways from the conference.

First, pricing & labor costs. Something we’ve been talking about in the industry for quite a while ranging from digital menu boards to AI technology that can predict future needs to how to maintain fair pricing while also turning a profit.

Second, experience is still key. At casual dining restaurants, there’s a hesitancy to embrace technology out of fear that it would disrupt the hospitality they’ve become known for. How can they balance both? Also, the rise in the new kind of eatertainment brands was a big theme of the conference.

Third, data is a big tech takeaway. We’ve been talking about data collection here for a while but the question of ‘what do I do with his data?’ is still a mystery for many brands, including the top 25.

Menu innovation never stops, but at times of rising costs and diminished labor, finding relatively easy ways to create menu news is especially appealing.

It’s operationally straightforward to swap one sauce for another, but quite impactful in terms of flavor.

Sweet-and-spicy was certainly the flavor combination of last year, and Arby’s, Qdoba, Buffalo Wild Wings, Genghis Grill, Red Lobster, Chester’s Chicken, and Bonchon all added sauces in that category. Twin Peaks added a hot sauce that’s so spicy its name requires an asterisk, while other chains augmented what they already had, such as The Halal Guys and Naf Naf Grill.

McDonald’s, while busily upgrading its burgers, also decided to make its beloved Big Mac sauce available for any menu item.

Dunkin’ found that the Butter Pecan Swirl which was a seasonal syrup that guests could add to their coffee was so popular that they made it a permanent addition to the menu.

Pizza Hut, the division of Yum Brands Inc., is partnering with online influencer Keith Lee for a new benefit pie, the company said Tuesday.

Plano, Texas-based Pizza Hut is teaming with the NAACP Outstanding Social Media Personality winner to support both Lee’s charities as well as promote its “$12 Any” campaign, which allows customers to customize their toppings and crust.

Lee’s community pizza features his family favorite toppings, pepperoni and bacon, on a hand-tossed crust.

Lee is known for his food content pushed to more than 16 million TikTok followers.

As part of this partnership, Pizza Hut and Lee will donate $50,000 to Southfield ANT and OakHills High School, where Keith and his wife, Ronni, attended high school.

Starbucks’ newest dual lineup of beverages takes on the “swicy” trend (that’s “sweet and spicy”) that has been popular with younger generations as of late. On April 14 at Coachella, Starbucks unveiled the new Spicy Lemonade Refreshers in three flavors — pineapple, dragonfruit and strawberry — that are spiced with Starbucks’ proprietary chili powder blend. 

These drinks, available at all Starbucks cafes for a limited time starting April 16, join the lineup of “swicy” drinks made with hot honey that were announced last month for Reserve stores in Chicago, New York City, and Seattle. Together, these beverages join the throng of hot honey pepperoni pizzas, sweet chili-flavored Takis, and chili pepper maple syrups that have been popular on menus and in grocery stores over the past year. 

Growing taco concept Velvet Taco has big plans for the next few years. Recently, Alicia Kelso went to the chain’s Dallas headquarters to tour the place and, more importantly, try the tacos.

While other brands have simplified and paired down menus, Velvet Taco has become known for expanding its menu. From the brand’s signature tacos like the Chicken Tikka to its weekly taco features, called WTF, the brand is leaning into the fun part of the restaurant industry.

CEO Clay Dover, who has worked at Pei Wei and Raising Cane’s as chief marketing officer, has promised that the chain will be growing soon and has 200 restaurants in the pipeline. Some of those new locations include airports as well as international expansion.

Teens continue to love Chick-fil-A and, as demonstrated by the chain’s recently reported 2023 AUVs — up almost 10% over 2022 — they’re not alone. The semi-annual Piper Sandler survey “Taking Stock with Teens” identified the top five restaurant chains favored by today’s teens, and the results are somewhat surprising.

In addition to Chick-fil-A, which received 16% of the vote, other top choices include McDonald’s (10%), Chipotle (9%), Raising Cane’s (4%), and Texas Roadhouse (4%).

The survey polled 6,020 teens with an average age of 16.1 from 47 states. Of the teens, 38% are employed part-time, and their average household income is $66,280.

Chick-fil-A is a favorite among consumers, and as the chicken segment has been on the rise, the chain has benefited from its success while maintaining its signature service. Last week, Technomic released its report on Chick-fil-A’s 2023 financials, which were up 43% over the chain’s 2018 numbers.

As Panera Bread is in the midst of a major brand transformation, traffic for the St. Louis-based company is up 5.2% year-over-year, according to recent data from Placer.AI — it’s biggest traffic growth spurt in almost a year, since a 10.8% jump last March.

While Panera originally made its mark by offering freshly baked bread and other bakery goods — and later on, used ethical sourcing and “clean” ingredients as an industry differentiator – the fast-casual brand has recently changed its outlook.

As Panera looks to “get back to its roots” ahead of a near-future IPO, the company recently introduced a menu transformation, while allegedly simultaneously axing about 19% of the menu, including flatbreads, grain bowls, select pastry items and cold brews, and more. Additionally, the company has quietly rolled back some of its ethical sourcing practices to allow for “judicious use of antibiotics” and ease supply chain pressures. At the same time, Panera is still grappling with several lawsuits surrounding Panera customers that died allegedly after consuming highly caffeinated lemonade energy drinks.