Category Archives: Casual Dining

Culver’s just turned 34. Its butter burgers, custard are ‘exporting Wisconsin’ nationwide.

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PRAIRIE DU SAC – A hunk of fresh ground beef hits the hot flat-top grill in the test kitchen at Culver’s headquarters.

Craig Culver, 68, uses a large, perfectly polished metal spatula to press the beef into perfectly round patties, with the help of an equally well-polished round metal canister. That grill isn’t quite hot enough, by the way, he comments.

I’ve watched (maybe secretly wishing I was in) the Culver’s commercials with the restaurant’s co-founder surprising customers, offering to bring them into the kitchen as he cooks their burgers. That was a tricky shoot, Culver says, because they were doing it during lunch hours at a Culver’s in Tampa, Florida. Continue reading

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Filed under Burger, Casual Dining, Dave Henkes, Fast Food, Menu, Press Release, Sales, Sales & Profits

Technomic’s Take: The Changing Face of Foodservice Purchasing

Dave_articleBy David Henkes, Senior Principal on August 17, 2017
https://www.technomic.com/newsletters/technomics-take/changing-face-foodservice-purchasing

Independent restaurants have been central to the success of both foodservice distributors and food and beverage companies serving the industry. They are more profitable (mostly due to inefficiencies of the purchase process and pricing practices that aren’t transparent), and their health has been a stabilizing force in an industry where many chains (particularly large casual-dining chains) have struggled to grow as saturation, value issues, competition and lack of differentiation have impacted their success.

However, while independents are generally healthy (relative to the rest of the industry), distributors and manufacturers cannot assume that these operators will continue to drive incremental profitability. As costs increase at the operator level, due to commodity swings, labor costs, rent and other input costs that continue to rise, operators are increasingly looking for options that are perceived to save them. As a result of this changing nature of foodservice purchasing, Technomic estimates that there is $1 billion to $2 billion in additional manufacturer profitability at risk over the next five years. This will be driven by the following:

Penetration of GPOs is continuing across all foodservice segments, but critically we see that many GPOs are now focused on growing share within the independent restaurant segment. Recent Technomic research indicates that nearly 14% of independent operators are active within GPOs and a larger number than ever before are considering joining in the near future.

While chains don’t have the same growth trajectory that they did several years ago, they continue to add units, and smaller midsize chains continue to excel. Most of these operators negotiate directly and receive contract pricing, further reducing the profitability of the market place.

Most major noncommercial segments (not only healthcare, but colleges, B&I, etc.) are heavily driven by contract pricing. For most of these segments, actual discretionary purchases that are not part of a GPO or foodservice management firm contact amount to 10% or less of their purchases.

These dynamics have several major implications for the foodservice industry, most notably:

  • Distributors and manufacturers have less leverage as chains and group purchasing organizations become power buyers. To a large degree, the growing nature of contracted procurement in foodservice has prompted many of the mergers and acquisitions over the past several years.
  • Distributor economics don’t work as well with contracted business. Most of this is cost plus and distributors, who covet the higher profitability of the true independent operator, need to become much more efficient in terms of logistics and drop sizes in an environment where the margin is generally under 10%.
  • GPOs have taken their negotiated prices meant for certain customers and have extended them into adjacent operator segments, often without manufacturer or distributor approval, further suppressing margins throughout the value chain.
  • The nature of the operator sales call, particularly for manufacturers, changes to one where they are not truly selling their products or solutions, but working to ensure compliance with a contract. It also impacts the fees and compensation that manufacturers are willing to pay to brokers and distributors, given that manufacturers often perceive selling to a GPO account to be less valuable to the manufacturer than bringing in a higher-margin independent account.

Technomic predicts that over 70% of the foodservice purchases will be contracted within the next five years (up from about 65% today) and the industry needs to be prepared as this shift continues. Margins, which have already been compressing over the past several years, will continue to tighten, and forward-thinking companies should strategically address this as part of longer range strategic planning and work to manage the change proactively to ensure the continued health and strength of the business. To do so, Technomic recommends that companies:

Fully understand the sales and volume incrementality of GPO and other contract business relative to the lower overall margin.
While lower margin, contracted business can be desirable if it provides incremental sales or volume opportunities. Manufacturers and distributors must understand and view GPOs and other contracted business in light of strategic priorities and which segments, products and entities will drive growth. While often lower margin, contract business can benefit distributors by increasing drop size and giving primary distributors a bigger share of purchases.

Understand and expand upon your leverage.
Contracted business is often viewed negatively because of the perceived loss of control of the operator. However, understanding key leverage points is critical, particularly for manufacturers to create pull at the operator level to avoid the commodity trap.

Audit contract compliance.
Another reason that GPOs and other contracted business is often viewed negatively is due to compliance and the complex nature of the purchase. Auditing and managing trade-spending programs, understanding true cost to serve and having dedicated personnel to oversee contract compliance are all best-in-class methods of reducing the leakage of funds that can have a negative impact on profitability.

Construct proper guardrails to ensure that higher margin business remains profitable.
Contract pricing should only be used for the entities for which that pricing is intended; manufacturers and distributors must ensure that guardrails are in place to avoid price-extendibility, where favorable pricing based on the contract is offered to other operators.

Realize that sales force realignment may be necessary.
As the industry heads toward higher share of contracted business, the nature of the sales call is changing. This may necessitate deployment of sales as activities change from demand creation to driving compliance.

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Filed under Casual Dining, Distributors, GPOs, Growth, Health, Independent Restaurants, Manufacturers, Uncategorized

How the Burger King deal could change Tim Hortons

burgerking

Merger will help expansion plans but could also change coffee chain’s more free-wheeling habits

Canadians aren’t likely to lose their beloved double-doubles or the Timbits that prove so perplexing to our American neighbours. But the planned acquisition of Canada’s Tim Hortons by the U.S.-based Burger King will undoubtedly bring changes.

Tim Hortons agreed Tuesday to be bought by 3G Capital, the investment firm that owns Burger King. The Miami-based burger chain said the new combined company would be based at the current headquarters of Tim Hortons in Oakville, Ont.

The $94-a-share deal has been unanimously approved by the boards of both companies, but is still subject to a shareholder vote. Regulators in the U.S. and Canada will also likely want a say.

If completed, the deal would automatically give the merged entity more clout simply by making it the world’s third-largest quick-service restaurant. The new company would have combined global sales of $23 billion and have 18,000 locations in 98 countries. Continue reading

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Filed under Burger, Casual Dining, Coffee/Cafe, Fast Casual, Quick Service

FROM THE FLOOR: Beverage Dealers Help Diversify

Diversify

As restaurant operators look to make sure that beverages continue to be a strong and growing element of their businesses, there are plenty of drink suppliers, product developers, and manufacturers looking at ways to help them boost their sales.

Hundreds of them are showing their wares during the four-day National Restaurant Association Restaurant, Hotel-Motel Show that continues its run in Chicago. A two-day sister confab, the International Wine, Spirits & Beer Event, also kicked off Sunday.

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Filed under Alcohol, Beer, Burger, Casual Dining, Dave Henkes, Fast Casual, Liquor, Marketing, NRA Show, Press Release, Skinny, Spirits, Wine

Buying into Booze

 

Buying into Booze

Does the future of fast casual lie in alcohol?

Fast-casual restaurants were once able to claim premium food, modern décor, and all-around upscale service as hallmarks of their category. But with more quick-service chains retooling in those areas to compete for post-recession consumers, fast casuals have been left to search for new ways to differentiate their brands.

For many, that search has turned up something typically better suited to fine- and casual-dining joints: booze.

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Filed under Alcohol, Beer, Casual Dining, Dave Henkes, Fast Casual, Liquor, Marketing, Press Release, Quick Service, Skinny, Spirits, Wine

Happy days are here again for bars and restaurants

Happy Days

A more optimistic outlook is being reported at the nation’s restaurants and bars, according to restaurant research firm Technomic’s 2012 BarTAB (Trends in Adult Beverage) report.

Sales of spirits, wine and beer in restaurants, bars and other licensed on-premise locations increased 4.9 percent to reach $93.7 billion in 2011 and projections called for continued growth in 2012. While on-premise consumption by volume declined slightly in 2011 (-1.1 percent), it also was expected to grow in 2012. On-premise consumption accounts for one-quarter of total adult beverage volume and slightly less than half of the total dollars spent on spirits, wine and beer. Continue reading

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Filed under Alcohol, Bar, Beer, Casual Dining, Dave Henkes, Fast Casual, Fine Dining, Hotels, Liquor, lounge, nightclub, Spirits, Wine

Technomic Finds Drink Sales and Volume Tracking Positively at the Bar

TAB

BarTAB (Trends in Adult Beverage) reveals the trends in on-premise segments

Adult beverage sales at the bar are growing in dollars and volume despite the rocky economic environment, according to Technomic’s 2012 BarTAB (Trends in Adult Beverage) report. Sales of spirits, wine and beer in restaurants, bars and other licensed on-premise locations increased 4.9 percent to reach $93.7 billion in 2011 and projections call for continued growth in 2012. Continue reading

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Filed under Alcohol, Bar, Beer, Casual Dining, Dave Henkes, Fast Casual, Fine Dining, Liquor, lounge, Marketing, nightclub, Press Release, Quick Service, Spirits, Wine