Restaurants don’t need a weatherman to know which way the wind blows. But every now and again it’d be good to hear one forecast a calm. Otherwise, the industry ends up with a week like the last one, when longstanding currents pushed the business toward extremes that would have been tough to imagine days earlier.
Think of it: no food-safety net, a change in Starbucks’ DNA, and a sign of how far some places are going to offer regional specialties.
What are we talking about? Read on and you’ll see.
1. Good news for germs?
Among the blockbuster developments of the last seven days was the release of President Donald Trump’s first budget, a notice to restaurants that their services from the federal government are about to change. Consider, for instance, the overhaul in how food safety will be monitored and promoted.
The budget calls for a “reform” of the Centers for Disease Control and Prevention, the agency with which restaurants and chains usually collaborate during a food-safety crisis. The Trump administration wants to push down the CDC’s function to the state level, tapping a $500 million kitty. It did not say how much the CDC would have left to spend on its own functions, but noted the budget for the Department of Health and Human Services, the agency encompassing the Centers, would be slashed by 17.9%, or $15.1 billion.
The specifics of the CDC’s new role were not explained. It was not clear if the agency would maintain its function of spotting a national food-safety problem in what states might regard as an isolated incident within their borders. That ability has helped restaurants in the past to avoid certain products suspected of being contaminated, such as spinach, peppers and cilantro.
During Trump's campaign for the presidency, his staff had indicated that the new administration might do away with a federal food-safety function.
The federal government's other main food-safety activity, monitoring the production of meat, poultry and egg products through the Department of Agriculture's Food Safety and Inspection Service, will remain fully funded, the Trump administration said.
Stay tuned for more restaurant-related implications of the budget as we digest it.
2. Starbucks’ two-in-one test, explained Sean Spicer-style
After blaming a sales slowdown on the “congestion” fostered by too much app business, Starbucks walked back its seemingly contradictory comments eight days ago.
“If I could read rewind the clock on the earnings call, I think I would change things a bit,” Starbucks CFO Scott Maw said at the March 9 UBS Global Consumer & Retail Conference, as recorded by SeekingAlpha.com. He “explained” that management might have been imprecise when it said December sales were hurt by walk-in customers doing an about-face because units were too packed with fellow patrons who were picking up coffees they’d already ordered via Starbucks’ app.
The affected stores were “not capacity-constrained,” and comp sales weren’t hurt, Maw said. “It's just in that flow and in that month, we saw some pressure.”
After the clarification, Maw revealed that some new stores are addressing the non-problem through “split production.”
“So you walk in, you go to the left-hand side, there's a Mobile Order & Pay sort of unit, and that's where your order is,” he said, “You go to the right-hand side and there's a POS.”
The chain is also experimenting with a cubbyhole retrieval area like the one Panera Bread provides for pre-ordered takeout meals, according to news reports.
Both approaches are a move away from the “third place” approach that Starbucks has long cited as a key to its success. Part of its founding rationale was to provide consumers with a third place in their lives, an alternative to their homes or workplaces.
3. Omnichannel’s omnidirection
One of the buzz phrases gaining favor in the restaurant business is “omnichannel,” the term retailers coined for providing their customers with every means of buying a product. For restaurants, it’s largely meant the addition of delivery service and new modes of takeout for full-service places. But fast-casual concept LYFE Kitchen is going the other way.
The chain is in the process of opening its first full-service riff, in Memphis, Tenn.
It’s not the only limited-service concept to move upmarket. Bojangles’ new format features a display kitchen, called the Biscuit Theater, as well as some table service. Patrons of Hooters’ new Hoots spinoff can order at the counter or via a server.
4. Clocking on-premise business
An offhand remark from Fogo de Chao, the Brazilian steakhouse chain, underscores why many full-service concepts are exploring new sales channels. In a conference call with investors, management boasted about the concept’s success in boosting guest visits, noting the typical customer now visits 14% more often than they have in the past.
In absolute numbers, patrons now visit 1.6 times per year, compared with an average of 1.4 times two years ago.
5. Local run amok?
Consumers’ interest in local favorites is influencing bar menus as well as bills of fare. A telling indication of how far afield some mixologists will go to spotlight local specialties: The Chicago cocktail from Adam Seger, executive bartender for The Tuck Room in New York and Los Angeles.
The drink is a tribute to the Chicago hot dog, and has snagged the attention of each city’s foodie community, perhaps in no small part because of its novelty. The ingredients of a classic Chicago dog—wiener, sport peppers, raw onion, pickle relish and mustard powder—are steeped in a back-bar rye. The solids are apparently strained out, leaving just the flavored whiskey.