Let’s turn the clock back, say, five years. Did you ever imagine Chipotle calling on Taco Bell to save its brand? It was just 2011 (OK that’s seven years) when a customer was trying to sue Taco Bell for its taco fixture being more filler than beef. And what was Chipotle’s image then? The fast casual king of quality with lines out the door. I remember waiting two hours for a burrito in college once. But back to the present: What is Taco Bell in 2018? Most of the conversation about the brand centers on personality. Its Forever 21 clothing line. People getting married in the restaurant. Commercials called “Web of Fries” starring Josh Duhamel that present like movie trailers. Taco Bell, believe it or not, is a lifestyle brand. Millennials want to be associated with it. Gen Z loves it. There’s simply no denying Brian Niccol did an amazing job turning Taco Bell into the image-driven powerhouse it is today (comps up 4 percent prove this works for sales, too). Can he do the same for Chipotle? Probably not the same, of course, but something equally impressive in regards to image? This is going to be an interesting few months.
Here were the week’s top stories.
Probably my favorite detail about Dallas icon El Fenix, which has expanded to 15 units, is the fact its menu looks pretty much the same as it did 10 decades ago. “There were one or two recipes where we thought we were being clever, and we made a couple small tweaks to get the product out quicker. We heard our customers loud and clear and changed it right back,” Firebird’s senior vice president of operations Tim Schroder said. “So since then we’ve done everything we can to stay true to the roots and the heritage of the original El Fenix. We’re still serving the same recipes today that they did 100 years ago.”
That is almost hard to believe. Yet, ever wonder how a restaurant makes it 100 years? Sure a large chunk of it is innovation but a very, very underrated part of is staying true to what you do best, and giving those generations of customers what they want, meal after meal, day after day, century after century.
This is the second year we’ve compiled a 40/40 list on QSR. It’s kind of a 40 under 40 of sorts. Only this is 40 fast casuals with 40 or fewer units. It’s a great exercise because it introduces us to each side of the fast casual spectrum. There’s Grandpa Mac, a two-unit concept out of Delaware serving up pasta from a James Beard-nominated chef. Then there’s Naf Naf Middle Eastern Grill, a 38-unit Chicago brand helmed by the former president of Moe’s Southwest Grill. The list truly runs the gamut, and is our best effort to showcase those restaurants ready for prime time.
Yes, it’s James Beard season again. Thursday marked the release of the chef and restaurant award semifinalists for 2018. The finalists will be announced March 14. These awards can be career changing. Even being named a semifinalist (a great accomplishment against the odds) is something a chef or restaurant can put on their branding forever. It just doesn’t get much better.
Continuing the discussion above, Chipotle, in my opinion, hit a home run with this hire. I have long believed the chain’s food-safety issues are overblown. The restaurant is pretty much as safe to eat at now as any. What it suffers from is a public relations crisis, and maybe a culture one depending on whom you ask. What they need more than anything is a marketing genius with the ability to spin the concept forward. Niccol fits the bill. He earned AdAge’s Marketer of the Year award in 2013. I’m looking forward to seeing what he cooks up.
Delivery. Traffic. Labor. C-store. Super markets. Off-premise. Technology. Sometimes I repeat these over and over again when I’m lying awake at night. Is that true? Maybe not. But I’m sure it is for some operators in this business. Here’s an in-depth look at not just what to expect, but what to do about some of these impending changes. It’s always best to be prepared, especially in a business as dynamic and unforgiving as this one.
So McDonald’s is going at Chick-fil-A? Apparently that’s the case, according to internal documents reviewed by Bloomberg. McDonald’s is calling this the “Better Chicken” plan. To date, the brand has improved its nuggets and promised to remove antibiotics in the future. That’s all great news, of course, but I just don’t see these two butting heads too much. Chick-fil-A and McDonald’s feel like different categories to me. And I’m not sure they really compete for the same customer all that often. Maybe I’m off base on this. I think quality across the industry is a great thing regardless. You have seen it squeeze fast casual in recent years as that gap with fast food narrows. From a consumer standpoint, there are few downsides to this war.
It may not seem like it, but Denny’s 2.2 percent comps growth in the fourth quarter is very impressive. Few casual chains of this size are reporting anywhere near that right now. For the year, same-store sales were up 1.1 percent over the prior-year period, making it seven straight years of positive system same-store sales. That’s worth celebrating in an industry where transactions are dropping and prices are rising. Denny’s is growing (14 opened in Q4) and reimagining its restaurants around the country (67 percent are done). That plus the On Demand platform boost gives Denny’s a bright base to catapult forward from—one that’s enviable for many of its peers.
I think fast food needs to watch out for Burger King. It’s like the 20,000-pound elephant in the room right now. In Q4, the chain reported same-store sales growth of 4.6 percent. More impressive: comps grew 6.1 percent in the U.S. compared to just 1.8 percent in the prior-year period. It’s far from surprising to see Burger King doing well. What is worth tracking, however, is the reality that Burger King has so much room to grow. Delivery and technology are really not its strength compared to competitors. When that catches up, watch out.