The week’s 5 head-spinning moments: Report card time

It’s only fitting that graduation season brought evaluations of some big names in the restaurant business—and the industry itself. Here’s a rundown of the gradings and who wasn’t helped by the curve.

And you thought Mom and Dad were hard to please 

Steve Ells and Monty Moran have raised the value of Chipotle Mexican Grill to about $500 a share. But stockholders didn’t show much appreciation when they voted Thursday against an increase in the co-CEOs’ compensation packages. It wasn’t a close vote; three out of four stockholders gave a thumbs-down to sweetening the pair’s pay.  That’s the most votes a say-on-pay proposal has garnered among the nation’s 3,000 public companies. Ever.

Because say-on-pay votes are not binding, Chipotle could ignore the wishes of its owners and proceed with a raise for Ells and Moran, who collected $25.1 million and $24.4 million, respectively, for 2013. But that’s less likely than the chain adopting an all-GMO menu.

The irony is that Chipotle is the darling of the activists and agitators who usually tar fast food as a social blight. Those parties usually rail against chains for their unabashed capitalism and relentless pursuit of profits. This time around, it’s the capitalists who are protesting, and their motivation is all about bolstering profits and dividends.

Critics of executive compensation levels say the victory by Chipotle shareholders could signal more pushback on pay across all business sectors. Ironically, restaurant companies have traditionally lagged behind industries like finance or technology in how they reward their CEOs.

It remains to be seen if other restaurant companies will draw the opposition of institutional investors, who objected to reported perks like education payments to Moran. But stay tuned, because we plan to monitor the situation.

Outback aims to turn C’s into A’s

There was a time when Outback executives took pride in the chain’s lousy sites, just as they beamed about the floors being salvaged from gymnasiums and the design relying heavily on boomerangs and Crocodile Dundee hats.  Wait times were measured in hours, so who cared if “C” locations were a necessary part of the business model?

But times have changed, as have Outback’s fortunes. The chain reaffirmed this week that the relocation of those old “C”-site stores is a top priority, along with opening new Bonefish Grills. “It’s all about getting to ‘A’ sites,” said Chief Financial and Administrative Officer Dave Theno.  The company has said that as many as 100 Outback units could be relocated as part of the concept’s renewal strategy.

Gold stars for fast casual

There’s always that one over-achiever who makes everyone else in the class feel like knuckle-draggers. In the restaurant business, that’s the fast-casual segment, hands down, as several events attested this week.

The start was Technomic’s reminder that fast casual is the engine driving the industry’s growth, churning out a sales leap last year of 11 percent, a figure several times larger than the increase for the restaurant business as a whole. To put it in perspective, the whole limited-service category grew its intake by only 3.5 percent.

Release of that satellite picture was followed by performance reviews of several individual concepts. It’s understandable that sister quick-service concepts might be on their way to a inferiority complex. Pizza Inn Holdings alerted investors that same-store sales for its namesake pizza chain were basically flat for the quarter ended March 30. But comps for the company’s Pie Five fast-casual outlets jumped 16.9 percent.

Similarly, comps for company-operated Qdoba stores rose 7 percent for the quarter ended April 13. The brand’s big brother, Jack in the Box, eked out just a 0.7-percent gain.

Restaurateurs give the business an F. Maybe even an F.U.

The ground is still quaking here in Chicago from the announcement last week that the nation’s premier encased meat emporium, Hot Doug’s, would close. Saying the upscale hot dog stand has a cult following, particularly among the city’s foodie community, is akin to declaring the Beatles were popular.

Throwing in the bun certainly wasn’t a business decision; the out-of-the-way joint is mobbed during conventional mealtimes, and you might as well make a weekend of a Friday or Saturday visit; the weekly LTO of French fries cooked in duck fat means biblical-scale waits.

The public story is that proprietor Doug Sohn had tired of the grind. The post-announcement explanation was similar to the pre-closing rationale provided by Ina Pinkney, queen of the Chicago breakfast scene, before she shut her namesake place. The pressure and work was just too much.

Now comes word that New York chef-operator David Burke is relinquishing day-to-day kitchen work at his collection of high-end places.  He’ll still be involved, but just not as much with the heavy lifting.

The industry appears to be wearing out its own.

Advocates fail NRA—for doing its job

Here’s a shocker: The National Restaurant Association lobbied against an increase in the federal minimum wage. Whoa.

It has also opposed paid sick leave initiatives, and was discovered via an internal memo to be tracking labor groups that press for increases in wages and the organization of restaurant employees.

Those bombshell revelations came to light in news reports that all but gasped in unveiling the association’s skullduggery. Which is more of a head scratcher than a bean turner. Isn’t it a responsibility of business associations to protect the interest of their constituents, in part by lobbying?

So we’ll hold that grade for further discussion on parent-teacher night.


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