As the restaurant industry sinks deeper into the muck, observers’ risk of neck strain rises exponentially. No sooner does a breath-stealing moment spin heads one way—a 15.8% drop in comp sales for a onetime leader of the fast-casual pizza segment, say—than another calamitous development snaps noggins in the opposite direction. Neck braces may soon rival smartphones as business necessities.
But the real boon to chiropractors this week was the efforts of big-name restaurant chains to find firmer ground. One of the most respected names in the business revealed it’s still looking to jump into another market. A mega-brand gathers its franchisees specifically to focus on finding and keeping good employees. And one of the world’s mega-marketers shifts dollars despite a downturn in traffic to drawing new recruits, not additional customers.
But those are just the big moves. Just as intriguing were the small adjustments, whether it was dropping dark meat chicken or holding off on expansion in California because of the business climate there.
Here are some of the dizzying moments.
1. The Cheesecake Factory’s next next concept
Casual dining’s unit-volume leader had beans spinning with its revelation in February 2015 that it planned to add a new concept to its fold, and likely one that’d be fast casual rather than full service. Keen observers had time to recover from the neck strain; it wasn’t until last November that Cheesecake disclosed it had chosen Flower Child, a fast casual developed by concept creator Sam Fox, as its vehicle into limited service.
But that, it turns out, was just the start. Cheesecake said in a securities filing this week that it’s also developing a fast-casual concept in-house, or what would be the chain’s second entrant in that burgeoning field. It specified that the venture startup would be in addition to the expansion of Flower Child, Grand Lux Café, the company’s namesake brand, the Fox-created full-service concept North Italia and RockSugar Pan Asian Kitchen, a venture that many had assumed was a one-off.
Cheesecake also noted in the filing that it’s pursuing “consumer packaged goods opportunities,” but did not divulge details on that venture or its internal fast-casual project.
2. Dunkin’s HR retreat
Dunkin’ Donuts hasn’t been immune to the industry downturn, with sales flattening during the first quarter. While that’s dog-bites-man material, heads should have been turned by one of the responses from parent company Dunkin’ Brands.
CEO Nigel Travis revealed that the doughnut chain convened an unusual gathering in April to ease franchisees’ strain. The event wasn’t directly focused on bolstering the top or bottom lines, but on helping the operators contend with the tightening labor market. Hence its name: the People Summit.
“It was dedicated to discussing best practices for recruiting, hiring, managing and motivating employees, as well as addressing the unique needs of a millennial crewmember,” said Travis.
About 800 franchisees and staffers attended, he added.
The chain is also trying to slow turnover by cutting the size of its food menu.
3. It’s the little things, like clean tables
Presumably, only a small part of a recent $50 million cash infusion in Noodles & Company will go toward what the company is describing as an important guest enhancement for the troubled chain. The No. 1 complaint from customers, according to acting CEO David Boennighausen, is finding unbussed tables, hardly a rarity in a concept where staffers pick up the used trays. So now Noodles is asking customers to pitch in.
“We will now be moving quickly to implement guest bussing stations in all of our restaurants, which we are confident will improve cleanliness, guest engagement and team member execution,” said Boennighausen, who says the retrofit should be complete by the end of the year.
He said the change will have the added benefit of giving employees more time to interact with guests, since they won’t be scurrying to keep the tables clean.
4. Chicken of a different color
The struggling Pollo Tropical chain is already reaping the benefits of a relatively slight but meaningful change, according to Richard Stockinger, the CEO of parent company Fiesta Restaurant Group. A prior regime had switched to chicken thigh meat for some of its selections as a cost-cutting move.
But guests didn’t like it, Stockinger said. With traffic slipping by 8.9% during the first quarter, the chain has switched back to white meat, and “it’s proving to be successful already,” Stockinger said.
5. California dreamin’ turns nightmarish
With only 45 restaurants in operation, a single opening is a highly material event for Kona Grill, the high-end chain that’s suffering along with the rest of casual dining. But it decided to forgo the startup of a branch in California because planting another restaurant there no longer makes business sense, according to CEO Berke Bakay.
“We have decided not to open our restaurant in El Segundo, Calif., due to the high cost of this business in California and the higher-than-average net flow cost for this restaurant,” he told investors. “Also we have not executed any new leases this year, so the plan for 2017 is to open only one unit and do [a] handful of remodels.”
Kona’s same-store sales dropped 4.3% during the first quarter.
6. McDonald’s makes a TV pitch for hires
A current commercial from the burger king might prompt a double take from restaurateurs similarly grappling with a downturn in traffic (McDonald’s reported a comp-sales gain of 1.7% for the first quarter, but executives said guest counts were negative). Like Dunkin’, the Golden Arches is focusing on labor.
The new spot shows an employee racing to his unit’s manager with a letter. The manager grabs the letter, rips it open, and reads aloud to the crew what turns out to be an acceptance letter for the employee from a college.
The ad touts the chain’s tuition assistance plan, and ends with the voice-over sell line, “Part of our commitment to being America’s best first job.”