Outside forces rudely pushed aside the restaurant industry’s usual concerns this week, prompting some operations to respond as if they’d sat on a tack. Yet the spirited responses to larger world issues went unnoticed by even keen observers because of all the screaming-headline developments.
Fortunately, safe and dry in the northern parts of the country, our proof of citizenship firmly in hand, we took it all in, neck strain be damned. Here are the head-spinning developments that some of you might have missed.
What did Hurricane Harvey cost the industry?
That seemed to be the question on every operator’s mind this week, but even colleagues in the still-flooded state of Texas said it’s too early to peg the damage. No wonder ears perked when Dave & Buster’s CEO Steve King addressed the question Tuesday during the food-and-games chain’s quarterly conference call this week with analysts.
King started his comments by expressing sympathy for fellow Texans affected by the storm, and noted that Dave & Buster’s three units in Houston had reopened last Friday after being shut for about a week.
The situation is so unique, he said, that the chain hasn’t computed the financial impact yet. Never before has Dave & Buster’s been forced to keep a store shut for a full week after a hurricane.
But the real question, he continued, is how the storm will affect demand. Will people struggling to rebuild their homes be eager to head out for an evening of dining and game playing? “It’ll be more about how those communities are able to recover,” he said.
Then he added a surprise. “Over my career, hurricanes in the intermediate term have typically been a tailwind,” King said, “but not in the short term.”
Starbucks’ plunge into the immigration melee
The politically minded chain decided it wouldn’t idly nurse a cappuccino while the Trump administration skimmed the labor pool instead of draining a swamp.
The ink was still drying on the White House directive to end the Deferred Action in Childhood Arrivals (DACA) program when Starbucks roused its lawyers into action. They filed a formal statement of support for a lawsuit the state of Washington brought against the federal government Wednesday to halt DACA’s reversal.
The coffee chain stated that it has reimbursed 84 employees for DACA application expenses, and assumes that many more associates have benefited from the program without seeking help from the company. The program allows immigrant children who were brought to the United States illegally to remain residents.
Starbucks, a native of Washington, is in powerful company. A formal statement of support was also filed by Amazon and Microsoft, neighbors in the Seattle area. The CEOs of the three businesses also sent a letter to President Trump last week, imploring him not to unravel the program.
Burger King’s currency gambit
Russians will soon have an alternative to Bitcoin, the virtual currency whose value rises and falls with demand. Consumers can use it to pay for a wide range of goods, but they’ll be far more limited in what they can buy with the new cryptocurrency: WhopperCoin.
Burger King revealed that it will provide patrons of its Russian units with a WhopperCoin credit for every ruble they spend. When they’ve amassed 1,700 credits, they can trade in their digital loot for a Whopper.
It’s the old Green Stamps model, updated for the internet age. But the weird aspect is what might happen behind the scenes. WhopperCoin users can trade their credits to other holders, or sell them for old-fashioned paper money. That leeway could yield speculation and changes in the currency’s worth.
An app the chain intends to introduce will create what amounts to a bookkeeping and marketplace system for patrons who collect the Bitcoin wannabe.
A retailer’s introduction to restaurant economics
Restoration Hardware turned heads when it announced plans to outfit a Chicago showcase store with a restaurant from local concept creator Brendan Sodikoff. The retro-home-furnishings seller was hailed as being in the vanguard of a movement within retailing to use in-store restaurants as brick-and-mortar draws in the age of e-commerce.
But the realities of the strategy have set in for Restoration. This week, CEO Gary Friedman lamented to investors that the Chicago store’s “gallery” section—the main area where the furniture and related items are showcased—employs 40 to 50 people. The much smaller restaurant space needs about 100 staffers to function, he noted, yet generates only about 10% of the facility’s sales.
Drink taxes’ impact is sharply felt
“The situation in Philadelphia and early days in Chicago is a mess,” Sandy Douglas, president of Coca-Cola’s North American operations, told investors this week. She specifically mentioned a downturn in business for restaurants because of the surcharge, without quantifying the damage.
Douglas noted how the tax has changed consumers’ shopping patterns. Why pay more for soft drinks in Philadelphia or Chicago when a buyer can get the same beverages for an appreciable difference by driving beyond the city or county lines?
And that, she said, is exactly what’s happening. She noted that jobs have already been eliminated, and retailers are rethinking plans to open food stores in “food deserts” because of the impact on sales.
The great irony, Douglas added, is that the taxes are lauded as ways of discouraging the consumption of sugared beverages. Yet the purchases of those drinks are already down 20% from 2000, she revealed.