This past week started with a pretty decent bombshell. As Arby’s closed on its $2.9 billion deal with Buffalo Wild Wings, the company announced the creation of Inspire Brands Inc. That in itself isn’t too revelatory. When you consider the brand value of Buffalo Wild Wings and Arby’s, having one company direct the other would have confused customers, and led to the dreaded question, “Will there be branded locations?” Of course not (the idea is mildly crazy). So Inspire Brands puts those issues to rest. However, what was interesting was CEO Paul Brown’s comment about the company’s goals to purchase no more than 10 chains, with system wide sales between $1 billion–$4.5 billion each. Any chain pushing that $1 billion barrier is going to be a serious name. Ten of them? That kind of portfolio is hard to even fathom. All I know is I can’t wait to find out who’s next.
Here were the biggest headlines of the week.
Legendary restaurants take the (sales) cake
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Legendary restaurants take the (sales) cake
I think we can all admire a restaurant brand pushing $36 million in sales despite closing from August–October each year. That’s Joe’s Stone Crab, by the way, and it’s one of 21 units featured in this story about legacy brands around the nation. These concepts have been around decades, centuries, sometimes multiple centuries, and are still crushing it in numbers and guest counts. Personally (as someone recently asked me) I haven’t been to all of them. I’ve dines at a few, and I hope to make it to all some day. Check out the list to see if your favorite spot made it.
Referring back to the initial line of thought, the merger of Arby’s and Buffalo Wild Wings will change the industry if these promised purchases happen. In the interim, let’s see how Arby’s, backed by Roark Capital, works to revitalize sales and declining foot traffic at Buffalo Wild Wings. There is still plenty of strength in the 1,250-unit chain’s branding. If chicken wing prices can stay at reasonable levels, and BWW hits the right value and promotional notes in 2018, the turnaround could happy quickly. Arby’s has the firepower operationally to streamline systems and infuse some of its comeback magic. Paul Brown said he wants to run the company like Hilton Hotels & Resorts, with a shared loyalty program perhaps. Only time will tell, but the entire industry should be watching.
We could probably debate the merits of reality TV and cooking shows forever. There’s no denying, though, Top Chef’s ability to launch careers for independent restaurants around the nation. Some of the most successful chefs on the scene right now competed on Top Chef. We caught up with five former contestants to see what they’re up to today, and how the experience molded their careers. What did they learn? Was it helpful? Did it hurt your career in any way? Those types of issues and more came up with these thriving chefs.
I found YUM! Brands deal with GrubHub to be striking. The parent company of KFC, Taco Bell, and Pizza Hut took a $200 million stake in the third-party delivery giant. What does that mean? For starters, it signals the beginning of a massive delivery platform for the iconic brands. Thousands of KFCs and Taco Bells will start delivering through GrubHub in the 1,300 markets or so the company operates in. Nearly half of YUM!’s 45,000 restaurants already offer pickup and delivery via online ordering, making this initiative a staggering one. What really piqued my interest, however, was the nature of the deal. You hear often that delivery through third-party providers boosts same-store sales but actually hurts margins. That’s probably why Panera is investing in its own in-house system. So does this partnership somehow lessen that impact for YUM! I don’t know. I’m not sure exactly what the benefit is for YUM! other than it can help accelerate the process by injecting liquidity into GrubHub’s operation. Is there more to it? All I can say for sure is YUM! just might take over the delivery game through this maneuver.
Uno Pizzeria & Grill turned 75 this year. Instead of just sitting back and popping bottles, the brand decided it was time to refresh the entire system. Uno’s plan for this wasn’t remodels or new tech, it was to infuse a beer culture throughout the organization. Uno took this very seriously. There’s Beer 101, 201, and 301 programs for employees, as well as Cicerone Certification Courses, a Beer Olympics, and even Beer Gurus in each region to make sure the units follow suit. At the core, Uno is offering curated beer lists through Uptappd for each location catered to local breweries. “It’s been a concerted effort throughout the entire organization,” chief operating officer Bill Golden said. That appears to have be an vast understatement.
The fast-casual chain has been a stock market punching bag in recent months. That has been the case this week as well. Shares are down about 20 percent for the week following its fourth-quarter earnings report, which showed same-store sales growth of 0.9 percent and revenue of $1.1 billion. Chipotle also unveiled some of its plans to reignite traffic and improve its operating structure—hopefully moves that could put those food-safety concerns in the rear view a bit (if that’s even possible at this point). Among them, Chipotle said it was using tax reform benefits to invest back into its 71,000-person workforce. This includes special cash and stock benefits, as well as enhanced parental leave. Some other notes: $45 million to retrofit new make-lines at about 30 percent of restaurants and $50 million to refresh restaurants across the system. In addition to looking for a new CEO, Chipotle will be busy in the coming days, weeks, months, and so forth.
2017 was a wild year for Fridays. The brand does all sorts of interesting things on social, like trading ribs for emojis, and then said it was going to try delivering alcohol in select markets. Throughout this process, Fridays has also been revamping its entire menu piece by piece. This included a new Burger Bar setup, 30 percent larger Big Ribs, and now, most recently, the introduction of a Fire-Grilled Meats section that leans heavy on the proteins and also features the brand’s upgraded sides, like Giant Onion Rings. Still, Fridays is only about halfway there and expects to complete the process by the end of the year. So stay tuned for much more.
Dunkin’ had a very eventful week. Its fourth-quarter earnings on Tuesday came just two days before its investor day at Fenway Park. (Won’t comment on this as a native New Yorker). The chain’s same-store sales growth of 0.8 percent wasn’t eye-catching, but Dunkin’ did show some real strength in its core offerings. Breakfast traffic numbers were the best in Q4 than they’ve been in two years, and breakfast sandwiches were sold at a higher clip than ever. That led Dunkin’ to outline a plan around its afternoon business, and what it expects will drive traffic across all dayparts. Among the bigger notes, Dunkin’ expects to open or retrofit 50 of its stores to next-generation models this year. These are built for the mobile user. The first one in Quincy, Massachusetts, features a double drive thru with one lane just for loyalty members. It’s a bold idea. I think it’s a great one, too. I have a feeling it’ll inspire others to follow suit.