The week served notice to restaurant executives that a good financial run doesn’t bestow the power to leap tall buildings in a single bound. Examples abounded of officials falling short by their own admission on secondary skills, or of outside business factors eluding their control.
Here are five instances where their capes took a tattering, albeit slight.
1. Have you thought about driver’s ed?
A new cost-control challenge is vexing chains that rely on delivery, as the financial community noted in breaking down the most recent financial results this week from Papa John’s. Analysts noticed that the franchisor was hit with $4.5 million in incremental insurance costs during the third quarter, a result of more car crashes. Maybe the delivery drivers were smashing into their rivals from Domino’s; the latter earmarked $5.7 million from third-quarter results to cover increased insurance costs.
2. Whoever she likes, bet the other way
A knowledge of pro sports is fast becoming an important attribute for restaurant executives to have, as Red Robin Chief Concept Officer Denny Post noted this week. She reported that the full-service burger chain has narrowed its pro-football affiliations this year to just one team, the Seattle Seahawks, after tying the brand to four teams last year.
“Just to prove that you do not want me picking your fantasy team, the three teams that we dropped have a combined record as of last night of 20 wins and two losses, while the Seahawks got off to what could kindly be called a slow start,” she joked to financial analysts. The decision still proved a good one, she said, because marketing dollars could be reallocated to more effective business drivers. But CFO Stuart Brown attributed a 0.1 percent decline in third-party traffic in part to the single-team affiliation.
3. Who’ll stop the rain?
Rain dancing, on the other hand, should remain a dark art to chain execs. Weather beyond their control has clearly complicated the task this year of delivering improved financial performance, as chains with a large presence in the drenched areas of Texas and Florida have recently attested. Fiesta Restaurant Group said the ongoing downpour in Florida was a major factor in the 1 percent drop in traffic at its Pollo Tropical brand. A rebound in the breakfast sales of Fiesta’s other brand, Taco Cabana, could be affect by the flooding in Texas, suggested CEO Tim Taft.
Austin, Texas-based Chuy’s has also felt a dampening effect from the rain and a hurricane that followed, but CEO Steve Hislop scoffed at another chain’s assertion that the one-two punch drove down comp sales by double digits. “We’re still up,” he said.
4. Another sort of problem from the cloud
Analysts pressed Potbelly CEO Aylwin Lewis for an explanation of some margin pressures the fast-casual operation suffered during the third quarter. Give Lewis credit for candor: “Some of it we should be managing better, some of it just happened to us.”
In the latter category was the unexpected fallout from shifting some unit-level operations from servers to virtual servers, a.k.a. the cloud. The changeover triggered a shutoff of the POS system’s firewalls, which in turn required the chain to forego accepting credit cards “for a long period of time,” Lewis said.
5. When execs go rogue
If there’s a sure-fire way of detecting the imminent flameout of an executive, particularly one whose brilliance stems from a willingness to flout convention, please pass it along to Yum! Brands.
The parent of Taco Bell, KFC and Pizza Hut found itself with a publicity challenge this week after the architect of Taco Bell’s much-lauded mobile initiative was caught on cam giving a beat-down to an Uber driver.
If there’s a Knucklehead Hall of Fame, Benjamin Golden is a shoo-in. He was drunk, obnoxious and threatening, but at least he didn’t connect himself to Taco Bell. Ironically, Yum assured that would happen when it fired Golden, who now faces criminal charges as well as a civil lawsuit.
6. Peel them a grape
It’s become a sport at gatherings of marketing and menu-development executives to bash sriracha as yesterday’s news and to speculate on what’s going to be the next hot flavor. Seldom if ever has the correct answer been given. An analysis by Technomic shows that the flavor gaining mentions on big-chain menus as the fastest clip is not gochujang or ghost pepper, but grape. Its listings as a marquee taste in lunch and dinner entrées are up 16 percent among the Top 500 chains, followed by buttermilk, with a 10 percent gain.