McNugget Reboot Targets Different Crowd

The Atlantic: “The reboot of the Chicken McNugget is a mechanism by which McDonald’s is continuing its effort to present itself as a ‘modern progressive burger company.’ Last year, the company announced the phasing out of chicken raised with antibiotics used in human medicine, said it would stop using palm oil linked to deforestation, and pledged to shift to cage-free eggs.”

“The revamped version of the Happy Meal staple will soon be free of artificial preservatives, instead containing lemon-juice solids and rice starch.”

“Through its rebranding process, McDonald’s has still managed to sell plenty of Chicken McNuggets, particularly to lower- and middle-income consumers who are concerned more about price point than about the impeachability of the company’s food sourcing. Instead, this tentative new McNugget is an effort to reach a different crowd. ‘There’s a smaller amount of consumers who don’t eat them, but might be willing to if they raised the bar on quality,’ said Darren Tristano, the executive vice president of the market-research firm Technomic.”

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In What Universe Is Salad a Technology?

Slate: “Walk past a Sweetgreen during lunchtime, and you’re bound to find a line of famished office workers snaking out the front door for a shredded-kale caesar salad or quinoa bowl. But when the Los Angeles-based farm-to-table salad chain launched a new app in January, it curiously referred to itself as a business that had developers—not produce or salad dressing—at its core. ‘We’ve always acted more like a tech company than a food one,’ read its press release.”

“In recent years, Sweetgreen has grown an in-house tech team and created an algorithm to make ordering more efficient … These days, businesses across every sector—from fashion to finance—are claiming the tech label. The recasting is seductive: It’s simply a lot cooler to be about the internet of things than to be about just things.”

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Chipotle ‘Loyalists’ Are Most Unforgiving

The Wall Street Journal: “Foursquare Inc. analyzed traffic data from its location-sharing mobile apps and found that Chipotle’s most loyal customers have been less forgiving of the chain than infrequent visitors. Last summer, 20% of Chipotle customers made up about half of foot-traffic visits.”

Says Foursquare CEO Jeff Glueck: “Interestingly, it’s this group of faithful customers that have changed their Chipotle eating habits most dramatically … These once-reliable visitors were actually 50% more likely to stay away in the fall during the outbreak, and they have been even harder to lure back in … Losing 2–3 loyal customers is the equivalent of losing about 10 other customers.”

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The Domino’s Effect & The Brand Experience

From a Wall Street Journal review of Door to Door by Edward Humes: “Domino’s Pizza … is really in the logistics business, funneling inputs—pineapple from Thailand, boxes from Georgia, salt from Minnesota—through 16 distribution points in the U.S. … one such ‘commissary’ … mixes enough dough, day in and day out, for 100,000 pizzas. Refrigerated big-rigs full of ingredients depart at 8 p.m. and make deliveries while the stores are closed.”

Mr. Humes writes: “The average American coffee-drinking household … never has less than 572,000 miles of travel pass through its coffeemaker every year.”

“The more complicated the product, the more tangled the supply chain … the components of an iPhone ‘collectively travel enough miles to circumnavigate the planet at least eight times.’ Assembly takes place in China, but the barometric sensor comes from Germany, the Gorilla Glass from Kentucky, the microprocessor from Taiwan or Texas.”

“We live like no other civilization in history, embedding ever greater amounts of miles within our goods and lives as a means of making everyday products and services seemingly more efficient and affordable,” writes Mr. Humes. “In the past, distance meant the opposite: added cost, added risk, added uncertainty. It’s as if we are defying gravity.”

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Philz Coffee: The Value is in The Experience

A San Francisco coffee house called Philz plans to challenge Starbucks with a different kind of experience, Forbes reports. “At Philz you won’t find the fancy brewing equipment of an artisanal coffeehouse. Beans are ground to order and then splashed with 205-degree water in pour-over funnel brewers. The coffee is good, but it is not cheap–a small coffee costs almost twice as much as Starbucks’ equivalent. Philz proponents say the value lies as much in the experience, or in what (founder Phil Jaber and his son Jacob) call ‘Grandma’s House,’ as it does in the coffee.”

“Unlike the corporate uniformity of Starbucks or the manicured hipster haunts like Blue Bottle, Philz has an informal charm that can be found in the mismatched couches at its original location and in the cup-by-cup approach of its baristas, who load drinks with heavy cream and brown sugar to each customer’s preference. ‘Taste it and make sure it’s perfect,’ a barista says before handing over a beverage. Details like that foster ‘an emotional connection’ for customers, says Jacob, 29, the CEO. ‘We think of ourselves as more in the people business than the coffee business.'”

“This year Philz plans to open at least two locations in Washington, D.C., the first true test of whether the company’s service-oriented approach can succeed outside California. Ultimately Jacob has visions of expanding into New York and Boston, with 1,000 stores nationwide, and “disrupting” the coffee industry … So far the company has interviewed more than 300 people, and Jacob has hired 30 … All will go through the company’s Apple-influenced Philz University training program, where they’ll be taught not to ask for customer names the way Starbucks does when taking orders. Doing so, Jacob says, is impersonal, because it suggests you’ve never met, and there’s a chance you’ll get it wrong.”

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Whole Foods 365: It’s All About Efficiency

The Washington Post: We’re inching closer to the launch of 365 by Whole Foods Market, a new, lower-priced grocery store that the organics giant is betting will help pull it out of a rough patch … The first 365 store is slated to open May 25 in the Silver Lake neighborhood of Los Angeles … Jeff Turnas, president of 365 … said in an interview that he and his team have ‘looked and turned over every stone to find efficiencies.’ That includes, for example, trying to lay out stores in a way that reduces the time it takes for a worker to get from the stockroom to the shelves.”

“Even the product assortment in these smaller format outposts is designed in part with an eye toward greater efficiency … with a center-aisle grocery item like olive oil, Turnas said, they tried to narrow the offerings … prepared food bars will be ‘a little more get-it-yourself, self-serve’ than those in a traditional Whole Foods … There will also be a kiosk called TeaBot built by a company of the same name that allows shoppers to create customized tea blends that are served up hot to the user in less than 30 seconds.”

“365 is also building its stores around a program called Friends of 365, in which it will turn over a small section of its square footage to like-minded retailers to make shopping more of an experience … Speculation has been running wild about what kinds of retailers might be included … Turnas said they’ve received video pitches or other inquiries from at least one tattoo parlor, more than one marijuana dispensary, and a pet grooming business. The thought process for choosing the Friends will vary from location to location.”

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Breadsticks & The Olive Garden Comeback

The Wall Street Journal: The Olive Garden’s turnaround began when Dave George, its president, “and members of his senior management team flew to different Olive Garden restaurants around the U.S. to work alongside busboys, dishwashers and cooks … Busboys said they cleared tables and set them with napkins, cutlery and glasses for a full party. If a hostess seated two people at a table for four, she would remove the extra settings, undoing their work. Cooks said they spent too much time filling cups of precisely measured basil for garnish—a regimen created to save waste. They also complained of having to weigh servings of uncooked pasta to fill 8-ounce bags.”

“We were spending a lot of labor hours on preparation and production and it added no benefit to the guest,” said Mr. George.

Then there were the breadsticks: “The quality of the breadsticks at Olive Garden … had declined, with the popular appetizers often cooling and hardening after sitting at the table for more than seven minutes … Managers were told to stick to the policy of delivering more breadsticks only on request. As the chain grew over the years to more than 800 restaurants with 90,000 employees, the policy wasn’t consistently followed, with some servers bringing out more without being asked.”

The chain also introduced “tabletop tablets for customers to order and pay for meals … to reduce wait times,” which allowed ” restaurants, on average, to close out checks seven minutes faster.” In addition: “Last summer, the chain began offering guests waiting for a table a 50% discount on a glass of wine, encouraging some guests to order a second glass.”

Since the moves, which followed “a rare shareholder coup 18 months ago” by Starboard Value LP, “the previously struggling stock has risen 47%, versus 6% for the S&P 500; much of its real estate has been spun off, giving shareholders a second stock; and year-over-year sales at existing locations of the Olive Garden chain have increased for six straight quarters.”

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Wafu Chuka: Probably Not The Next Ramen Noodles

The New York Times: The restaurant Saburi has been an unassuming presence on a quiet street in the Manhattan neighborhood of Kips Bay for 10 years … From evening until 3 a.m., Saburi becomes a lively canteen filled with Japanese businessmen, Japanese expatriates and American enthusiasts of Japanese culture … The cuisine is called wafu chuka and is, simply put, Japanese-style Chinese food, or rather, Chinese dishes modified for Japanese sensibilities. It involves putting a Japanese spin on Chinese cuisine by using fewer spices and oils and adding fresh Japanese ingredients.”

Wafu Chuka “emerged in the early 1900s during the Meiji Restoration period, when Japan was opened up to international trade. It originated in cities including Nagasaki, Kobe and Yokohama … and is eaten throughout Japan … At the restaurant, female bartenders wear short Chinese dresses. Shadow puppets, the paper-thin figurines used in the ancient Chinese storytelling form, are framed on walls … And customers can store unfinished bottles of shochu, a Japanese liquor, behind the bar for future consumption — a tradition in pubs in the island nation.”

Sadly, Saburi is closing because of “lease difficulties” and its husband-and-wife owners, Jun Cui (who is Chinese) and Mika Saburi (who is Japanese) “desire to move back to Japan.” Kiara Phillips, a regular, comments: “The problem is it’s not like the ramen boom. Everyone is crazy for ramen now. And the wafu chuka style never quite took off that way. But is that a bad thing? It means people didn’t take it over and start doing it wrong,” she said. “No one else is trying to make it the best. No one is trying to make it something it’s not. The way it is here is just the way it is done.”

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Burger King Re-Discovers its Inner Whopper

The Wall Street Journal: “Following unsuccessful efforts to appeal to a broader, more health-conscious customer base with salads, snack wraps, smoothies and low-calorie french fries, Burger King has returned to its roots as a purveyor of inexpensive burgers, fries and, now, hot dogs.”

“The bloated menu complicated kitchen operations and failed to attract customers as hoped. In 2010, Burger King launched more than 30 limited-time offers and 20 permanent menu items. By comparison, it launched 20 limited-time offers last year and no permanent menu items.” Burger King President Alex Macedo: “In a moment when a lot of brands in quick service are trying to become more fast-casual, we’re taking an opposite view.”

“David Harper, a franchisee who operates 72 Burger Kings in several states, said the chain has learned not to repeat its biggest mistake: copying rivals. ‘We know who we are now,’ he said … The changes are showing results. Burger King’s adjusted earnings before interest, taxes, depreciation and amortization grew 68% between 2010 and 2015 … Same-store sales at U.S. and Canadian restaurants grew 5.7% last year, better than most big rivals.”

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Slower Is Better for Younger Coffee Drinkers

“Once about speed—sloshed into a paper cup and gulped on the ride to work—quick coffee now signals cheap coffee and not what customers want,” The Wall Street Journal reports. “More coffee shops are betting that a wait of four minutes or more is desirable … Coffee shops are weighing costs and revenues of slower service by evaluating employees behind the counter, longer brew times, and how that effects prices and lines.”

“Consumers in their 20s and 30s who grew up around Starbucks and coffee culture’s bolder flavors are helping drive the slower service, says Spencer Turer, vice president of Coffee Analysts, a coffee consulting firm in Burlington, Vt.” He comments: “That conversation with the barista is a key part of the experience.”

“The extra minutes also provide time for the smell and sounds of coffee which add to how consumers perceive their coffee, says Charles Spence, professor of experimental psychology at the University of Oxford, who also researches consumers’ sensory perceptions for food companies … The complex aroma and flavor of coffee comes from about 40 individual chemical compounds, he says.”

“’The sounds of grinding, dripping, spluttering, those are all meaningful,’ he says, and play a role in how the consumer perceives both the flavor and quality.”

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