Press releases highlighting a restaurant company’s financial performance often exclude the subtle reasons for a swing in the numbers. That’s why investment analysts use conference calls with management to probe for what Wall Street calls color, or the nuances that provide a sharper picture of the business.
Here, for instance, are some dabs of color from last week that clarified why McDonald’s and Pizza Hut enjoyed such dramatic recent rebounds, and why BJ’s Restaurants continuous to be a standout in casual dining.
1. The McMagic of larger print
Asked about McDonald’s success in simplifying operations, CEO Steve Easterbrook explained during the burger giant’s last analyst call that “I could take hours” to recount the steps that have succeeded. Sure, there was the streamlining of drive-thru menu boards and a new interaction where the employee taking an order checks twice with the patron to avoid time-eating mistakes.
Then Easterbrook went a step further to show “we’re into the real details.” For instance, he revealed, the chain took a hard look at the font size of what’s printed on receipts. By enhancing the legibility, “it's easier to spot the special requests, for example, or the special orders,” he said.
2. New source of heat at Pizza Hut
One of the big surprises of the current earning season is the rebound by Pizza Hut, which posted a 5 percent year-over-year gain in domestic comparable restaurant sales for the first quarter.
The good news isn’t limited to top line, Greg Creed, CEO of parent company Yum Brands, noted during his call with analysts. The pizza chain’s operating costs are getting a nice uplift, he explained, from the changeover of 1,300 ovens in domestic stores. The new equipment cuts energy use by about 25 percent, and cooks food faster, according to Creed.
3. Tweaks in BJ’s pizza recipe
Long before kitchen simplification became the mantra of the day, BJ’s Restaurants was taking a hard look at how it could cut back its menu and streamline kitchen operations to enhance execution. That effort is far from over, CEO Greg Trojan revealed during the company’s analyst call last week. Indeed, he said, the concept is enjoying very positive results from a simple tweak in the way it makes deep-dish pizza, a signature for the chain.
At the recommendation of crewmembers, the casual concept experimented with the assembly process and decided to add the tomato sauce at a different point. “The new method simplifies our prep process, gives our culinary team more flexibility in terms of pizza flavor combinations and produces a fresher and more robust tomato flavor for our pizzas,” Trojan said.
4. Biggest comp gain ever?
McDonald’s Easterbrook all but blurted out the first-quarter sales results for a division that had been the burger giant’s sucking chest wound, but who could blame him? “I'd be remiss if I didn't call out Japan, where comparable sales increased 27 percent [year-over-year],” he said, noting that a food safety scandal involving a chicken supplier had walloped the brand in past years.