Special analysis from current month data

For the first time since we began tracking around two years ago we have seen more pull-outs from states, than expansions into new states.

So far this month (November) 20 companies pulled operations out of states versus 17 who have expanded into new states. Although this is the first time we saw an actual reduction of state expansion growth, we have noticed this slowing trend line during the past 4-6 months.

However, 131 companies have posted unit increases compared to 81 who had decreases.

Our synopsis is that; the above facts lend itself to the belief that companies are growing more in a
spoke and wheel development method within a region, while shedding far flung units that prove to be more difficult to operate without close physical corporate and peer contact.

IHMRS in NY

We just completed a three-day tour of the NY Hotel/Motel and Restaurant Show this past few days. It was extremely busy and we saw a couple of new products to get excited about.

The neatest item we found was a table base made by a company out of Australia called "FLAT" that fixes the problem of wobbly tables. There have been others on the market for years, but this product has actual hydraulic feet in the table base that adjust instantaneously on whatever floor type it is placed on. One of the best features is the cost of the base which runs only around $50.

The other equipment product we saw that got us excited is made by Delfield (A division of Enodis) called "Versa Drawer." It is a drawer refrigerator with four drawers (at least the one that I saw). In each drawer you can set it to either cool, chill, thaw or freeze at a touch of a button. Users can then change the settings on the drawers at will. Now that's versatile!

Increases vs. Decreases. Some trends.

We have seen a significant closing of units during our last four-month period. For the past two years (since we began tracking), chains were increasing units by 2 to 1 margin. Optimism had a long run. Whether or not locations were succeeding by year over year sales comparisons or not, is not what we gauge here, only expansions and lack there of.

Now we are seeing closings that almost equal openings 1 for 1 for the first time since our tracking began. In some weeks we saw closings edging out openings by slight margins.

Other insights include a purview into quick/fast service locations that have been closing units lately as well as upscale and casual types, which have been steadily shedding units for about one year. Prior to this period, data revealed no end in sight for the quick/fast service segment.

Above all, most growth is still quick/fast service restaurants vs. casual/upscale by a unit-opening margin of 4 to 1.

Restaurant Survey Results

Here are the results of last weeks survey:

How did you first learn about the Restaurantchains.net newsletter?

51% of respondents are Restaurant Chain executives, senior managers or owners.

47% of respondents are manufacturers, vendors, suppliers or consultants.

2% of respondendents are students or teachers.

____________

If their was an option for a more enhanced newsletter would you want to receive it?

78% Yes

14% Maybe

6% I am not sure

2% No

_____________

Would you consider paying a fee for a more enhanced newsletter?

49% No

47% Yes or it depends upon the cost.

2% Are you crazy?

2% I am not sure

Synopsis:

75% of those who want more information and are willing to pay a fee (to produce the extra work product) are suppliers, vendors and manufacturers.

20% of Restaurant Chain executives are willing to pay a fee for a more enhanced newsletter.

Considering the responses from the survey we are going to launch a more enhanced newsletter option in the near future.

Other issues:

We received alot of comments from chain executives regarding what best methods can they use to submit their company for inclusion in the newsletter.

What you can do:


Typically all news stories come from internal tracking by our researchers as a result of calling your company every four months. But if you have press release information you want to share or breaking news, please send it immediately to us in PDF format.

___________

Many of you expressed interest in exposing the audience to technology information, automation issues, new equipment and operational benefits.

If you have a press release, specific issues or something you think may be of interest to our readers, please send it to us in PDF format.

What we will do:

We are currently putting together a plan addressing these issues for inclusion and commentary.

___________

We've had this question numerous times:

Why can't I see all the alerts that are published each week?

Answer:

This alerts newsletter only highlights a fraction of alerts. Currently full weekly alerts reports are bundled as part of a subscription to Restaurantchains.net.

Soon we will offer the full alerts report as a stand alone product for purchase.

Restaurant Incubator Index for September and....

Septembers index is slightly up and we are showing a continual slight slowing from July thru September. In the past month of September the index increased by .08% (less than 1/10 of 1 percent). In the previous month of August the index increased by .1% (1/10 of 1 percent).

Clients have warned us about the slowdown. In addition, colleagues in other vertical industries have been complaining of severe slowdowns in almost all retail sectors of the economy in 2006. As you can see by the numbers the increase is far from zealous, but their still is one. As my father always told me: People gotta eat!

Also, many of you have asked how do I get my growth story into the weekly Restaurantchains.net alerts newsletter?

First it would help us to know as much about your company and concept as we can. Start with contacting the office here and asking for inclusion. At the same time help us to go over your company record with a staff researcher. You can begin the process by calling us at 914-591-4297 or sending an email to keith@restaurantchains.net.

A few things

We found the Restaurantchain.net alerts newsletter to be hugely popular. We are clocking more than 17,000 bonafide reads per month. We are constantly receiving positive reviews from our readers. We love it and say thank you!

Many readers in our feedback survey have asked for more information. As a result we will be adding to the size of the newsletter, adding sponsors, detailed contact personnel and other unique up to date information. Whereas Restaurantchains.net subscribers will always receive our full offerings at no extra cost, non paying subscribers will be asked to pay an enhanced fee for the value added information we intend to provide. Stay tuned.

August RestaurantChains.net Incubator Index

Our now monthly installments of the Restaurantchains.net Incubator Index are up for viewing at the website. We now have monthly capability and you can watch the index change over time.

You saw it coming

In recent national press it seems that casual, full-service restaurant chains are having the most trying times they can remember.

When we began our RestaurantChains.net alerts newsletter displaying emerging/growing (and no longer growing) concepts in the beginning of this year, we were hard pressed to find casual chains that were growing at all. For the most part we only noticed they were closing them. We struggled and had a lot of tension in the office here towards trying to find some casual or upscale restaurant chains/groups to write about in the newsletter.

If you've reviewed our newsletters (you still can-they are archived on the website) you can barely find anything but quick service and fast casual chains that are growing. Newsletter after newsletter the point has been proven.

Next week, with the new month coming, we'll be releasing our new Retaurant Incubator Index numbers in the newsletter. To sign up for the newsletter please go to www.restaurantchains.net and sign up on the home page.

Restaurant chain incubator index

After nearly a year of evaluation and preparation we believe we've created a brand new benchmark for the restaurant industry. Next week, we will release our first findings as a result of our new incubator index.

The new incubator index starts with an index score of 1,000. We have included chains with 4 or more stores and less than 200. Already we are seeing fresh trends. We'll soon get into the details and methodologies. Stay tuned for the release.

Newsletter is now weekly

Today we are publishing our 13th RestaurantChains.net Alerts Newsletter. We have been publishing twice a month and our readership has grown to the point where we believe it makes sense to go weekly. We've also begun to accept advertising as a means of supporting the free newsletter. We do expect to be offering a more detailed paid version soon.

The new site is up!

After 9 months of planning, designing and getting ready, we have launched our new restaurantchains.net site. One of the best features is average unit volume per company. I personally took on this project and made the final assessment on the AUV's. Some, who are public companies were easier to gather information on. The bottom line is it took us around six months of time working into the night (weekends and holidays too) to get it done.

The result? A never before published field value (we're the first in the restaurant research/directory business to assess AUV's on so many companies) that makes sense! Now users can search on AUV ranges and create lookups that deliver.

Other changes include full searchability and "from and to" searches on sales.

Celebrity Cruises

I spent a little more than one week on a family vacation to Alaska. I typically don't review my dining experiences but I'll spend a moment on it for now. You may know that cruise ships typically have an upscale restaurant or two on board for extra charges. On the cruise ship Infinity they have one called the S.S. United States Restaurant.

The cost is $30 additional per person (all other foodservice is included in the cost of the cruise). The service was French and the food Nouvelle French. WOW! it was astonishing as I would give it a full five stars! The food was delicate and the service solicitious and poised. I am happy to recommend it. I spent three of my seven dinners there.

Ice Cream Wars

The Spring certainly is the Ice Cream growth period. There is a torrid race to brand and capitalize on the publics favorite dessert. Here are some of the current counts:

1. Rita's Italian Ice. Increased recently going from 342-361 units.
2. Maggie Moo's. Increased recently going from 181-190 units.
3. Cold Stone Creamery now has 1300 locations.
4. Marble Slam Creamery now has 326 locations.
5. Friendly's currently has 530 locations.
6. Baskin Robbins has more than 5600 locations.

I have also heard of a concept called Ray's Italian Ices which operates mostly in the NE who is so popular there's a never ending waiting list to become a franchisee. They are very hard to track down. I believe they have more than 50 locations.

Chains Expanding

Here is a list of some recent expansions by restaurant chains over the most recent four month period:

Buffalo Wild Wings increased 34 units. From 350-384 units.
Bob Evans/Mimis increased 7 units for their Mimi's concepts. From 96-103 units.
Juice it up increased 7 units. From 92-99 units.
Fox & Hound increased 3 units. From 65-68 units.
Logan's Roadhouse increased 7 units. From 153-160 units.
Philly's best increased 3 units. From 18-21 units.
Wing Zone increased 6 units. From 74-79 units.

NRA Chicago 2006

We just got back from the NRA show in Chicago. As usual the show was very busy. And as many of you may already know, President Bush came by for a speech.

Days 1,2 and 3 seemed even busier than last year as far as foot traffic down the aisles. From our perspective (we were not near food which draws the most foot traffic) Tuesday was off by nearly 50% foot traffic from last year. Overall most vendors in the North and South upstairs were happy. Vendors downstairs complained of light traffic overall.

As usual you see a lot of new products. The best one I saw was from someone who wasn't even exhibiting. Payam Lavi of convenience enterprises came by our booth and showed me a picture of an automatic silverware/napkin wrapper. A good idea considering that job is typically done by a server towards the end of his or her shift. Aside from being typically unsanitary, the labor savings of using a machine to perform this job function seem obvious.

Big restaurant companies are still growing strong

You may have grown up with some of the chains I am about to mention. But don't think because you've been there a hundred plus times they are getting complacent. In the past four months we found the following growers over the last four month period:

1. Papa Johns. 2903 to 2924 units.
2. TGI Friday's. 778 to 806 units.
3. Outback Steakhouse. 914 to 926 units.
4. IHOP. 1228 to 1252 units.
5. Chuck E Cheese. 507 to 522 units.

Point of Sale systems and Food Distributor changes

New field additions POS and food distributor were added to the RestaurantChains.net directory over the past 18 months. The first sweep through (calling all chains to find out who and what they were using) took 10 months, the second sweep through (quality control) almost eight months.

Now it's come time to re-verify (annual re-verification) and we began two weeks ago. So far we're through 150 company records and found 3% of companies changed their food distributor and 3% their POS.

Personnel turnover during the past trimester

In our every four month re-verification cycle of our restaurantchains.net directory we took a count of how many of whom had changed positions at the corporate level during the period from 12/19/05- 04/19/06. Listed here are the results:

Changes in personnel include 32 marketing, 22 chefs, 17 purchasing, 16 operations, 14 human resources, 12 training, 10 real estate, 9 CFO's, 8 COO's, 8 controllers, 7 CEO's, 7 franchising, 6 IT, and 4 construction.

The preceding numbers DO NOT reflect the more than 400 other folks with same (or other) titles who have been added during the period.

Watch out Starbucks and Dunkin Donuts!

Caribou Coffee is quietly going on a growth tear. The bigger boys are getting the press, but Caribou has grown 17% in just the past four months. They have grown from 337 to 395 stores and expanded into the states of IN & SD.

New Newsletter!

We started a new (every two weeks) newsletter displaying changes in the restaurant chains that we track. Currently, we have 3719 chains in our database that we call and reverify every four months. 3400 are unique brand, the remainder franchisee companies.

Since the RestaurantChains.net project began we have been through the entire database 10 times by now. I believe we are finding some neat-to-read items.

Now you can get a copy sent to you by email every two weeks. Just send me an email at keith@foodservicereport.com and request to be added and please include your name and company information.

So far we have sent out four newsletters and the demand has been so great we have to hand over our email management to a third party company. Within a week or so we'll have our new website up where we will have newlsetter archives as well as a new email sign up tool.

Quick Casual and Bodacious

Chains that are developing today do it fast and reasonable. An example of a casual chain is Applebee’s with more than three new locations opening each week in the past months and years. Subway on the quick service side opens more than 30 locations each week in the U.S. alone. We have just begun to look at this, but looking at the new counts of developing chains we estimate new openings are 55-65% to be quick service or fast casual, 30-35% casual or family style and 5-10% upscale. The 100 seat family or upscale restaurant is showing signs of a disappearing profile. To develop quickly today we are seeing full service locations that are large and bodacious or small to mid-size with a quick service approach.

New restaurants and their nature in the beginning

Here in the office for the past 10 years or so we've been finding, sorting and qualifying new restaurant locations. Most new openings are not chain restaurants but independents. On the average, we publish more than 750 new restaurant openings per week. More than 80% of what we report on are independent, single unit operators. The remaining 20% are chain operators. So rest assured chains are not taking over the world. Not yet.

How come the chains start with such a bang compared to independents? From our perspective it comes down to a sense of posture and respect. We can often tell in the first phone call if someone will be out of business within a year. We believe it's congruent with what a customer sees and feels as they drive into the parking lot and enters through the front door. Sure, clean restaurants and quality design provide a basis but if the phone is not answered with a pleasant indulgent confidence the rest of the operation can follow suit.

If you've ever called a large chain restaurant and asked for the manager (even if the location is brand new or pre-opening), the host, wait person, cook or other line level employee will ask you to "please hold on" and then go and get the manager without much quizzing. Typically he will pick up the phone and patiently answer your questions. Almost nothing is off limits.

Our view is many new independent operators take a filtering approach towards callers which can sometimes alienate future customers.

Special analysis of succeeding restaurant concept types

In taking a close-up look at the type of restaurants that are emerging over the past months there seems to be a common principle: Allow the customer to order a meal or a significant appetizer for fewer than 10 dollars (excluding beverages and other add-ons). We have found chains with a menu mix that welcomes customers of all shapes and wallet sizes is what’s working now.

It seems that restaurants that can accomodate a table of four and be happy that two folks ordered only an appetizer, one an entree and dessert, and the other only soup are the clear winners in todays environment.

New York Restaurant Show

We just got back in the office today after three days at the NY Restaurant Show at the Javits. It was extraordinarily busy. I believe the expo company did a more than sufficient job of pre-show marketing. There was alot of food offered. So much so, you could not walk through many aisles for hours with comfort if you wanted to do business and not just graze. We noticed a heavy amount of cookies and cakes. Seems coffee type cakes are all the rage right now.

We saw an amazing product out of Japan. It was a cooler. A sort of reach-in refrigerator like you get your soda from in your local convenience store. Anyway, they grabbed a bottle of un-opened coke out of this cooler and then opened it. Then it magically turned the soda to a slushie type of consistency. Some sort of smooth ice chunks. They said it's hugely poplar in Japan. The company is called Magiquoal. I personally shook a bottle of un-opened water and watched as ice magically appear within the bottle. I imagine they could sell well here. Picture an ice infused slushie in the hot summer with no cup and ice needed.

The show also had a night club area in the back corner of the show. Kind of classy and lots of alcohol sampling going on. This show seemed to have more alcohol presence overall than in the past few years. Lots of exotic liquors and Belgium beers.