We’re pretty sure the restaurant industry is suffering a midlife crisis. Look at the jaw-dropping events of the last week alone. Like that quiet Rotarian uncle who leaves job, family and bowling league for a free-love commune in the desert, the business went more than a little wacky. Instead of just buying a Corvette or getting a boob job, it broke out the love beads and took up the tambourine.
Here’s what led us to that diagnosis.
1. McDonald’s tweaks another icon
It may be just a matter of time until Ronald McDonald is renamed Gangsta Mac and writes a tell-all about hanging with Snoop Dogg and Kanye. The brand that zealously guarded its icons from the effects of time, refusing to change so much as a molecule, is now eagerly re-engineering the most sacred of cows.
First it riffed on the Big Mac, changing the size and formula, and now it’s messing with one of the industry’s most celebrated limited-time offers, the Shamrock Shake.
The green minty special for St. Patrick’s Day has ranked right up there with the McRib and Starbucks’ Pumpkin Spice Latte on lists of the most-loved LTOs, which is why it was a hands-off product for McD’s. This year, it’ll be offered in five different preparations, including a half-chocolate, half-mint riff, the Chocolate Shamrock Shake.
The farthest reaches will be a Shamrock Hot Chocolate and a Shamrock Mocha hot coffee, made with a shot of the minty syrup that gives the traditional LTO its flavor.
The drinks are actually not new. Some stores were whipping them up at the request of patrons during past St. Patrick’s Day celebrations, though always on the sly. Now the secret menu—and a true secret menu, not widely known nor publicized at all—is right there on promotional materials.
2. Hooters goes braless
We and virtually the rest of the media world reported this week on Hooters’ plan to spin off a fast-casual variation called Hoots. The surprise noted in every single story was Hooters’ decision to hire men as well as women for dining room posts, an about-face from the mother chain’s refusal, despite intense regulatory and public pressure, to drop its gender bias in hiring. And the whole staff will be spared the revealing garb that was unabashedly part of the Hooters formula. No longer would breasts be as much of a feature as the wings.
But the head-turning surprise for people in the restaurant industry was Hooters’ contrarian decision to try a fast-casual variation. Many of its fellow full-service chains have already given that defense against limited service a try, typically tacking an “express” onto their names and paring back the menu. With the exception of Denny’s The Den, which has worked mostly on alternative sites like college campuses, the ventures haven’t met success.
Indeed, more questions arose this week about the health of the fast-casual segment, or at least certain key sections. A shakeout already appears to be underway in the pizza sector, and now signs are proliferating that the better-burger market may be wheezing as well. Most of the players have hit tougher slogging once they moved outside their regional home markets, and the abundance of brands and their relatively quick expansion has set the stage for a shakeout.
3. Tattoo as incentive
Being of the same vintage, we salute Red Robin CEO Denny Marie Post for getting her first-ever tat this week, a payoff to the staff for a challenge she issued shortly after taking her current job. If the Red Robin team could raise a measure of guests’ satisfaction and propensity to return to a blue-sky threshold, she’d commemorate the feat by getting inked.
This week, after the score increased 30%, Post visited a Las Vegas tattoo parlor to have her arm embellished with the skin art. She walked out with a depiction on her arm of a Red Robin burger.
4. Starbucks’ answer to too much: Even more
Many competitors likely wished they had the problem Starbucks cited as the reason for a deceleration of same-store sales last quarter. So many customers are placing their orders and paying for them remotely that units are socked with patrons making a pickup, prompting walk-ins to bail before they can buy something. Traditional customers just aren’t willing to brave the “congestion,” as Starbucks terms it.
It was puzzling, then, to learn of the innovation Starbucks embraced this week. Patrons who don’t have time to push a button on their phone screens will soon be able to shout to their in-home Amazon Echo devices, “Alexa, order me a latte.” The voice recognition capability is also being adopted for the chain’s popular phone app.
Users can order both a ready-to-drink coffee, retrievable from the nearest unit, or a retail pack of ground coffee.
5. Not every franchisor is selling stores
Most of the big franchised restaurant chains are racing to sell their stores to new and existing franchisees, a strategy intended to generate more of a return for shareholders and free up investment capital. But signs emerging in the last week or so indicate not every franchisor has swilled the Kool-Aid.
Sonic Drive-In revealed late last month that it was setting up its company restaurant operations as a franchisee it just happens to own. Christina Bell Vaughan, a 15-year veteran of the system, was named president of Sonic’s 350 corporate units, and was simultaneously given a seat on the chain’s Franchisee Advisory Council.
Arby’s has similarly shown that it intends to remain a restaurant operator as well as a franchisor.
And Cheddar’s Scratch Kitchen bought its largest franchisee, the 44-unit Greer Cos., about a month ago.
They’re still adhering to the traditional notion that operating restaurants alongside franchisees demonstrates a commitment to improving the bottom line as well as sales.