There’s no question that Burger King’s new Bacon Cheddar Stuffed Burger isn’t really a stuffed burger: a true Juicy Lucy-style stuffed burger has fillings in the center of the burger. BK simply mixes bacon and cheese into its ground beef patty. But at least those are traditional burger condiments. In Germany, McDonald’s this week has introduced a similar burger that will not be on any list of items the chain should bring to the States.
McDonald’s El Chili Con Carne burger
McDonald’s doesn’t bill its El Chili con Carne as a stuffed burger, but, like BK, it mixes ingredients into the beef patty. What ingredients? Kidney beans and corn kernels. Like chili con carne. Sort of. “Chili con Carne like you’ve never eaten it” truthfully proclaims the burger’s description on the McDonald’s Germany website. “Ay, Caramba” it concludes.
The El Chili con Carne Burger is part of McDonald’s menu for “Los Wochos,” an LTO promotional salute to Mexican foods it has done in past years. The menu also includes Los Beefos, which sound like a parody of Mexican foods. Los Beefos are described as “Juicy beef meatballs surrounded by a spicy breading. Together with a spicy tomato dip salsa–mucho fantastico!” Fantastico, indeed. Just right for snacking.
No promotional menu is complete without a chicken entrée, of course. The LTO’s Chicken Fiesta sandwich has a breaded chicken patty topped with corn kernels, Cheddar, Mexican hot sauce and sour-cream sauce.
Despite being not at all Mexican, the often-offered 1955 Burger (topped with grilled onions, bacon and smoky barbecue sauce) also is included on the “Los Wachos” promotional menu. Perhaps it was just time to bring back this popular burger. I’ll say it, too: Ay, Caramba.
Restaurant visits by U.S. Hispanic diners declined by 1% in 2012 at the same time that overall restaurant traffic rose by 1%, The NPD Group reports. The decline in Hispanic traffic translates to a loss of 86 million visits. Cutbacks in restaurant visits were most pronounced among Hispanic consumers ages 18 to 34, an especially important demographic since it accounts for 34% of all restaurant visits by U.S. Hispanics.
U.S. Hispanics made approximately 9.6 billion visits in 2012 and spent $63 billion, according to Bonnie Riggs, NPD restaurant industry analyst.
McDonald’s MeEncanta.com site targets Spanish-speaking consumers.
Hispanic-consumer spending ticked up last year. NPD says the average check for Hispanic diners rose 4%, an increase NPD says reflects a “shift away from value menus, most likely due to the change in offerings or price increases.”
Degree of assimilation and the economy are important factors in Hispanic dining habits. Among less-assimilated, less-bicultural U.S. Hispanics, the reduction in restaurant visits last year was 2%, according to NPD’s CREST Hispanic tracking. NPD says the higher unemployment rate (10.3% on average last year compared with the 8.1% national average) among Hispanic and Latino consumers contributed to the decline.
Full-service restaurants suffered the greatest decline in Hispanic-consumer dining occasions. Quick-service visits rose: QSRs accounted for 84% of Hispanic dining occasions in 2012, up 1 percentage point from the previous year. By comparison, QSRs represent 78% of non-Hispanic-consumer visits.
Researcher Technomic also is looking at Hispanic diners, updating its Hispanic Foodservice Consumer Trend Report. Among its findings are that “less-acculturated consumers are twice as likely as more-acculturated Hispanics to look for Hispanic foods (39% and 20%, respectively) and flavors (45% and 20%, respectively) at American-style restaurants.”
Another finding is that 44% of Hispanic diners say they are more likely to visit a restaurant that does Spanish-language advertising. Among less-acculturated Hispanic diners this preference rises to 79%.
Whataburger is venturing into retail sales for the first time, announcing that its signature condiments—Fancy Ketchup, Spicy Ketchup and Original Mustard—will be sold exclusively at H-E-B stores in Texas and Mexico this summer.
The San Antonio-based chain’s Original Mustard, which dates to its founding in 1950, will be sold in 16-oz. containers with a label reading, “The True Taste of a Whataburger.” The Fancy Ketchup and Spicy Ketchup will be in 20-oz. containers, labeled “Bottled by Popular Demand” and “Wake Up You Taste Buds” respectively. The Spicy Ketchup, introduced as an LTO in January 2012, was recently brought back and now will be a permanent part of the Whataburger menu.
Blanc Burgers + Bottles’ condiments
Additionally, H-E-B will offer a newly created product called Whatafries, billed as “a potato chip version of the french fry,” made from real potatoes and packaged in a 7.4-ounce bag.
Whataburger is the latest of several burger operations that have moved signature products to retail. Midvale, Utah-based Arctic Circle has sold its bottled Fry Sauce for decades. Cincinnati-based Frisch’s Big Boy sells its Tartar Sauce; White Castle hamburgers are available in retail freezers. Umami sells its bottled house ketchup, “Master Sauce” and other condiments, McDonald’s even licensed a retail mayonnaise brand briefly in Europe.
Independent burger bars are joining the retail trend as well. Blanc Burgers + Bottles in Kansas City, Mo., for example, sells its house ketchup and chipotle aïoli.
Proof that the rise of the burger bar has been a global phenomenon comes in the opening here of Burgerīm, an Israeli quick-service chain with 62 locations back home. Signage proclaims it “A Burger Revolution,” and while that might be a bit hyperbolic, at least Burgerīm is a bit different from the competition.
Wedged into a small storefront on Santa Monica Blvd. in West Hollywood, Calif., Burgerīm—Hebrew for “multiple burgers”—offers a variety of 3-inch, high-quality burgers. Meats are all natural and hormone free; buns are preservative-free. With the mini (3.5 oz.) burgers priced at about $2.75 to $3.75 each, the defining idea is to mix and match interesting combinations. Choices are signature beef, Kobe beef, Mediterranean-style Mergez beef sausage and lamb. Nonbeef choices are chicken, crispy chicken, turkey, ahi tuna and veggie.
Where other burger joints focus on special builds, Burgerīm suggests a variety of combos: The Revolution (Kobe + Mergez); The Mediterranean (lamb + Mergez); The Surf + Turf (ahi tuna + signature beef); The Mermaid (ahi tuna + veggie) and others.
Onion, tomato, lettuce and pickles are the basic toppings but several non-standard Mediterranean toppings offered include hummus, tahini, harisa (hot red-pepper sauce) and Moroccan tomato salad. Moroccan-dusted onion rings are menued, as well as sweet potato and shoestring fries. Specialty salads include an Israeli Salad, Grilled Chicken Greek Salad and a Quinoa Salad. One of Coca-Cola’s new Freestyle dispensers by the counter allows for more than 140 different customizable soft-drink choices.
Cousins Oren Loni and Ashley Gershoony founded Burgerīm in 2008 in Israel, where there are 62 franchises. The company intends to move as quickly as possible selling franchises—including multiunit deals—here. Potential franchisees need not have franchise or restaurant experience. Franchise fee is $50,000. Basic 10-year franchise agreements call for a 2% marketing fee and a royalty of 6% of gross. Estimated initial investments to establish a Burgerīm franchise range from $185,000 to $465,000. Full details are available through the company’s website.
This was McDonald’s Corp. CEO Don Thompson’s pledge during last week’s Q1 earnings call: “Throughout the year, we will feature even more compelling new products in the United States, especially in our four key growth categories of chicken, premium beef, breakfast and beverages.”
And from where will these great new menu items come? Said COO Tim Fenton, “We’re doing more with existing products we had in different countries and … we’re finding out that great products travel really easily across country borders.” He cites recent imports Chicken McBites (from Australia) and the CBO (from Europe).
Assuming McDonald’s is serious about its intention to further raid its global menus for domestic LTOs, I offer this modest proposal: Import these 12 ready-to-market items to the U.S., all of which have appeared on McDonald’s menus somewhere roughly in the past year. I’m excluding items that don’t have a chance to succeed with Americans, such as the Chicken Curry and Sweet-and-Sour McNoodles from Austria or kiwi-on-a-stick from Italy. The 12 items I’ve selected could increase customer traffic, which is what Thompson says McDonald’s must do in a zero-growth eating-out marketplace. Those four key categories are breakfast, premium beef, chicken and beverages, you say? Here goes:
◊ Is it possible McDonald’s in Malaysia has a cooler breakfast menu than the U.S.? What would Ray Kroc say to that? The “Mega Indulgent Weekend” breakfast menu in Malaysia includes a Chicken McMuffin with Egg. Add that to the U.S. menu; remove the boring Southern Style Chicken Biscuit. If you also want to add either or both the Double Egg McMuffin or the Double Sausage McMuffin now on offer in Malaysia, that’s fine. But the breakfast menu needs chicken.
◊ Breakfast also could use something hearty with cult appeal of McRib. Something like the McMuffin BBQ Pork sandwich in Germany. Pork sausage, double cheese, lettuce, BBQ sauce and muffin. Hit.
◊ McDonald’s has rolled out the McWrap here as a chicken item. Take a lesson from your stores in Poland and offer the Breakfast McWrap with eggs and bacon. It’s big so it doesn’t have to be sold in pairs as the little Steak and Egg Burritos are now.
◊ Yes, the 1955 Burger. What is the delay here? This burger, introduced nearly three years ago in Germany, has been an LTO in just about every European market at least once. Some are on repeat visits. It’s named for the year Kroc opened his first restaurant in Des Plaines, Ill. Don’t you think it would sell in Des Plaines (at least when the current flood there subsides)? Beef, caramelized onions, bacon, BBQ sauce: We can handle it.
◊ The M. This is one of the first “upscale” burgers McDonald’s added to its global menu when fast-casual’s rise pushed it to improve quality perceptions. The M and its signature bake-shop roll is a hit in Europe and the UK, but has come to visit here. Let’s do it.
◊ How about a mini burger? Not like the Snack Wraps where you cut up a burger patty and roll up the bits but a real one. The Le Petit McBaguette mini burger on a French roll has done well in France. Why wouldn’t it score here as a premium-price snack?
◊ Flatbread is on-trend. Wendy’s has it now with chicken; Burger King did a Lamb Flatbread in the UK; Subway has offered it for years. So consider the Greek Mac—beef, yogurt sauce, red onion, tomato and lettuce on pita bread—that’s currently menued at McDonald’s in The Netherlands. I predicted this would be the Year of the Bun; help me out here.
◊ Two words: Chicken Box. Across Europe McDonald’ offers customizable chicken-snack boxes. You can mix Chicken McNuggets, Chicken Sticks or Chicken McBites in a box of 3, 5, 10, 20 or whatever. Let’s try it.
◊ “Two all-chicken patties, lettuce, cheese…” The Chicken Big Mac has floated around the McDonald’s system for years, most recently appearing in Arab markets. You want a premium-price chicken item that benefits from an iconic name? Here it is.
◊ The current Spicy McChicken is small and not very spicy. Let’s bring in the Spicy Thai McBistro Chicken, which is bigger and truly spicy. This sandwich is from Canada where they’re more innovative with chicken (see the earlier McMini).
◊ McCafé at McDonald’s in Thailand has a line of green tea drinks, including hot green tea, Iced Green Tea and a Green Tea Cream Frappé. The iced and frappé versions would sell here and add some international flair to the beverages menu.
◊ In almost every market except the U.S., McDonald’s uses the McFlurry as a key menu-promotion element. The McFlurry has been overlooked here lately. Correct that by offering the Mars McFlurry with candy-bar pieces that the Belgians are enjoying. The nutritionists will howl, but it’s a limited-time indulgence. And nutritionists probably will buy one, too.
McDonald’s Corp. CEO Don Thompson explained the company’s poor showing in the first quarter by stressing once again that the Informal Eating Out (IEO) marketplace is a zero-sum game where survival and growth come at the expense of competitors. “Our growth is going to come from taking market share,” Thompson told analysts. The “thoughtful and strategic decisions” the chain is making globally all are directed to that goal of increasing market share.
Short-term discounting on McWrap to increase customer traffic is indicative of the new marketing strategy.
Four of its top seven markets are experiencing a contracting dining-out marketplace, Thompson. However, he stressed, McDonald’s has increased its share in six of those seven markets (the lone holdout apparently is China, where McDonald’s comparative sales dipped 4.6% in Q1). In January, McDonald’s claimed to hold slightly more than 9% of the global IEO market. In 2010, the company had said it held about 11.5% of the U.S. IEO market.
The company’s Q1 report was negative, as expected, but even more so than some Wall Street watchers had expected. Global comp sales were down 1% with U.S. comps off 1.2%. In Europe sales fell by 1.1%, and the Asia/Pacific/MidEast/Africa region fell 3.3% thanks to results in China and Japan (one market where the IEO has been contracting). Same-store sales for April are expected to be negative as well, the company said.
How will McDonald’s respond? Continued remodeling, new menu products and value marketing:
• Since the marketplace is unfriendly to price increases, sales growth has to come more from traffic increases than pricing. That means more “discount LTOs” (my term, not McDonald’s) with short-term price breaks such as the current $2 offer on the new McWrap. “As we move forward, it goes to full price” of about $4, he said.
Operators may hate such price breaks because they hurt margins but that’s unfortunate but can’t be helped, McDonald’s execs said, because the tactic steals customers from competitors. “That is what we have to do to win,” said EVP-CFO Peter Bensen.
• The now-clichéd “robust pipeline” of new products. McDonald’s really needs to find a new adjective. But as it did in January, the company promises to be more aggressive with new menu products. These may be new “platforms” that can be further developed, such as McWrap, said COO Tim Fenton. The plan also includes the upcoming rollout of the Blueberry Pomegranate Smoothie that allows McDonald’s to “remind customers of the whole line,” he said. New food and beverage items introduced this year will be “all higher-margin products,” Fenton said. It was a comment directed a much to nervous McDonald’s operators as to analysts.
As reported here earlier, McDonald’s strategy in Australia of streamlining menus, adding lower cost chicken items and promoting a McValue Lunch Club Card discount is a model that could be used elsewhere.
Thompson says McDonald’s does “not expect any significant change in the short-term” to the consumer-confidence and discretionary-spending doldrums that plague the IEO now. But we’ve competed in market-share battles before and we’ve won them, Bensen added. “We will continue to make the necessary adjustments to grow our share,” he vowed.
In April 2012, Good Times Burgers & Frozen Custard hired Heathcote Capital LLC, many assumed the Golden, Colo.-based regional QSR was seeking a buyer. But President-CEO said that on the contrary Good Times was looking to buy. This week 39-unit Good Times announced deals with Charlotte, N.C.-based Bad Daddy’s Burger Bar. BurgerBusiness.com spoke with Good Times’ President-CEO Boyd Hoback about the new opportunity, breakfast, dollar menus and more.
We spoke a year ago after you’d engaged Heathcote Capital LLC to seek an acquisition candidate. Some people were skeptical that you’d accomplish that, since “mid majors” don’t often do such deals. But you have done so with the agreements announced this week with Bad Daddy’s Burger Bar.
We went about it in a different way than we expected. We talked with the principals of Bad Daddy’s but they didn’t want to sell yet; it was just to early. They’ve developed several other brands and they think there’s a lot of potential for Bad Daddy’s. So we ended up joint venturing, with us equally owning the franchise development company and then our gaining our own rights to develop the Bad Daddy’s concept here.
Why was Bad Daddy’s the right fit for you?
A couple of things. First of all, we really like the concept. It has fantastic unit economics and the food is really good. We also liked its segment. We look at a lot of places in the fast-casual and self-serve burger and better-burger segments and it’s getting awfully crowded awfully fast. It’s hard to differentiate the concepts.
We liked that while Bad Daddy’s is burger-centric it’s not limited to just burgers. It has a pretty wide menu with a lot of innovative food. And it has a lot of opportunity over time to be even more innovative.
We also liked the stage where they’re at. They don’t really have a corporate infrastructure and didn’t want to build one. We have one and it can be leveraged pretty significantly. We’re pretty good on the processes, systems and operations side; they’re really good on the culinary side. We liked the prospect of marrying the two together.
When you were evaluating concepts, did you specifically want one with alcoholic-beverage service, which Good Times doesn’t have?
It wasn’t a requirement but we liked that aspect of it. We liked a concept that’s not really a bar, not a 2 a.m. concept, but that has the opportunity to do 20% of sales in bar sales, primarily though microbrews and craft beers. We like that for the volume it has and the margin it has. All of that leads to its solid unit economics.
We’ve said we were looking for three things. One was a differentiated concept with long legs and a long life to it. Second was really good unit economics: cash return and sales-to-investment [ratio]. Third was a management team that wants to stay involved. [Bad Daddy’s founders] Frank Scibelli and Dennis Thompson and their team don’t want to get out yet. They want to grow this concept.
Do you intend to offer opportunities to develop Bad Daddy’s to Good Times franchise holders?
No. It’s completely separate and a totally different concept. It’s a somewhat different skillset.
Are you at all worried about Bad Daddy’s being a distraction to your efforts to improve Good Times?
No, for two reasons. One is that we have a very capable team on Good Times and the second is that our line of sight is pretty clear: We’re going to continue to build out [Good Times] company stores in Colorado and we think there’s a lot of value in that. We’re continuing on the three-year same-store sales growth while also expanding Bad Daddy’s.
You’ve taken several big steps to update Good Times, including remodeling some of your older, double-drive-thru units. Is that continuing?
It’ll continue and accelerate. We have stores that are 25 years old now and we need to get better consistency in our brand presence and the reimaging does that. With most of the stores, the change is fairly cosmetic. There are a few stores that will be more extensive remodels. But we hope to complete that over the next 18 months. We’re seeing good results from those efforts: good sales increase and a positive consumer response.
Hatch Valley Green Chile Breakfast Burritos give Good Times a morning daypart.
You also have a third iteration of your restaurant that’s in-between the no-dining-room original stores and the 70-seat unit you’ve added in the past several years. Is the new model the one for the future?
Yes. We haven’t built any of the 40-seat stores yet but that’s what we plan on building. We started with small double-drive thrus with 800 square feet and then we went up to 2,300 or 2,400 square feet with dining rooms. We think the optimum model for us is probably in the 2,000-square-feet, 50-seat-dining-room range.
Is that dictated by what the marketplace wants or by what yields the best financials?
Both. Even in our seating stores, we still do an abundance of our sales at the drive-thru. We had been building 70-seat dining rooms. We think we can do the same [sales] or more volume with 50 seats and improve the unit economics a little.
Wendy’s hasn’t found the way to make breakfast work but you’ve added a limited morning daypart.
We did, but we took a different approach. We’d always stayed away from breakfast because it’s so hard to crack. And we didn’t want to just do one more egg-and-meat breakfast sandwich or biscuits. You can get that everywhere, including now Taco Bell, Sonic, Subway and others. There are slightly different versions of the same thing at all those.
A year ago we had done a promotion with a local, high-quality green chile here in Colorado and had taken a look at the proliferation of mom-and-pop $2 burritos. But nobody in QSR was doing it. What we liked was that part of our brand is our authenticity and using regional ingredients in more a hand-crafted approach. We were able to develop a Hatch Valley New Mexico green chile that has quite a bit of kick to it. It’s not your typical QSR product. We fashioned that into a variety of $2 breakfast burritos, which is really labor efficient. Our break-even point for the [morning] daypart was pretty low but we’ve about doubled it. We’re happy with it.
You’ve done it without significantly increasing labor?
We’ve increased labor a little bit but our flow-through on that daypart is still very profitable. Our operations team did a great of designing it in a labor-efficient way.
Will you hit your initial goal of having breakfast provide an increment 6% in sales?
We’re already well past that. Click here to continue reading Good Times: Four Reasons We Like Bad Daddy’s
McDonald’s Corp. releases Q1 2013 sales results on Friday and the numbers aren’t expected to be pretty. Or positive. A 1.5% decrease in global comp sales for February after a 1.9% decline in January have fairly well sealed the deal on the quarter. There also are signals that consumer confidence and spending are still fragile in Europe even more than in the United States. That’s why upcoming menu and marketing changes coming next week to McDonald’s in Australia, which has been seeing positive sales growth, may be indicative of the company’s overall strategic thinking.
The high-end Grand Chicken is among items exiting McDonald’s Australia menu. New chicken sandwiches are coming on.
Janney Montgomery Scott analyst Mark Kalinowski forecasts a +0.9% change in March global sales, giving McDonald’s a -0.8% net for Q1. He foresees U.S. comps at 0.3% for March and -0.7% for the quarter. One McDonald’s franchise operator surveyed about Q1 by Kalinowski sums up the situation neatly: “Cold weather, economy, gas prices, competitor improvements/promotions.” In other words, a tough sales environment.
Ad agencies apparently are suffering from a similar sluggish landscape where consumers aren’t spending. The Wall Street Journal this week reported that Paris-based ad conglomerate Publicis Groupe has seen a 6.5% decline in organic (continuing operations) sales growth in the first quarter. “The car market is suffering, purchasing power isn’t improving, the job market is facing tremendous difficulties and Germany—the only country doing well—isn’t yet pushing consumption,” the Journal quotes Publicis CEO Maurice Levy as saying. “2013 will be very difficult.”
Publicis is the parent of Leo Burnett, which handles McDonald’s advertising in the UK and Ireland and which is one of two agencies (with DDB) handling national advertising for McDonald’s in the United States.
McDonald’s has consistently pointed to Australia’s positive growth as a balance to flat or declining sales elsewhere in its Asia/Pacific zone. McDonald’s has rebuilt customer counts that softened in early 2012 by introducing a value-price Loose Change Menu on the low end and a string of innovative burgers—such as the Serious Lamb Burger and Mighty McMuffin (with bacon and sausage)—at the premium end, with promotions in the middle to appeal to all.
A new McValue Lunch Club Card entitles holders to discounts even after the McValue Lunch promo ends.
Australia began the year with the return of the Monopoly promotion (after a 13-year hiatus) that McDonald’s has run for two decades in the U.S. and frequently elsewhere (it’s in the UK now). That was followed by a first: the Tastes of America menu promotion that is a staple of McDonald’s menu marketing in Europe. As reported earlier, the Tastes promotion, which ends next week, has included Smoky Texan and New York Classic beef burgers, California Chicken burger, Chilli Cheese Pops snacks and a Roadhouse Brekkie Roll for breakfast.
Those items leave the menu next week (or when inventory is depleted) and sources say McDonald’s will shake up the Australia menu as it has done in the U.S. (where Chicken Selects and several slow-selling breakfast items have disappeared). Leaving McDonald’s Aussie menu will be a number of choices from the upscale “M Selections” menu, described as “a little bit fancy.” Departing are the Grand Chicken sandwich; Chicken Deluxe and Chicken Bacon Deluxe sandwiches; Chicken Caesar wraps; and morning items NYC Benedict Bagel, Bakehouse Brekkie Roll and Rösti Brekkie Wrap.
What will paring down the high end clear menu space for? The revised menu will be more price-sensitive, taking on three new chicken sandwiches at tiered (low, middle, high) prices, but no new beef burgers. The breakfast menu gets a new Chorizo McMuffin. A Crunchie McFlurry joins the desserts/snacks offerings.
While continuing the all-day Loose Change menu, McDonald’s also has briefly revived the McValue Lunch promotion from noon to 2 p.m. as a limited-time deal in Australia. It offers $5.95 pricing on a burger, medium fries and medium soft drink. But customers can enjoy the discount longer if they get and show a new McValue Lunch Club Card that entitles them to savings.
All this suggests that McDonald’s may well deal with slowness in the global Informal Eating Out marketplace not only by stressing value and discount but also through heightened operational efficiency from eliminating higher-end items that don’t earn their keep.
What’s needed is balance. The Janney survey uncovers grumbling, in the U.S. at least, about the damage done by a too-heavy value focus. Said one franchisee: “Every quarter we sell a smaller percentage of our menu at full (and profitable) price.” Another added: “We have worn out the value message and value has become the new norm. We need “new” news–not just cheap food.”
Good Times’ Big Daddy Bacon Cheeseburger
[Update: Read the interview with Good Times CEO Boyd Hoback explaining the deal. It's here.]
In retrospect, the headline for the BurgerBusiness.com interview in February with Bad Daddy’s Burger Bar co-owner Frank Scibelli was prescient: “Good Times for Bad Daddy’s Burger Bar.” Now, indeed, Good Times Burgers & Frozen Custard has announced deals to take a 48% stake in Bad Daddy’s franchising operation and to develop the concept in Colorado, Arizona and Kansas. Good times also will provide management services to the franchisor.
Bad Daddy’s Big Ass Burger
Golden, Colo.-based Good Times is expected to open its first Bad Daddy’s in Denver later this year.
The deals aren’t completely surprising considering another BurgerBusiness.com interview, this with Good Times’ President-CEO Boyd Hoback in April 2012. He said then that the company was on the lookout for another concept to acquire. “We’re not looking to convert something into more Good Times units,” Hoback said then. “We’re looking at acquiring something in another segment and growing it. It may be in the “better burger” or fast-casual categories but there are a number of concepts we’re looking at.”
In announcing the deals, Good Times Chairman David Dobbins said, “We have spent the last year looking for the right acquisition and growth opportunity and have reviewed over two dozen concepts that can help transform Good Times into a robust growth company.”
One of Good Times’ signature menu items is its Big Daddy Bacon Cheeseburger. Bad Daddy’s, founded in 2009, changed its name from Big Daddy’s in 2011. It’s best known for its $13 Bad Ass Burger, a combination of two 5-oz. beef-and-bacon patties, lettuce, tomato, buttermilk fried bacon, horseradish mayo and English Cheddar cheese.
Bad Daddy’s has three locations in Charlotte, N.C., and one in Raleigh, N.C. A downsized unit at Charlotte International Airport is operated by HMSHost. Good Times Burgers & Frozen Custard has 39 locations, the majority of which are in Colorado. Sales for Good Times Restaurants Inc. were $19.3 million in 2012.
According to the Denver Post, Good Times will own 48% of Charlotte, N.C.-based Bad Daddy’s Franchise Development LLC, the franchising company. Good Times is granted first right of purchase of Charlotte, N.C.-based Bad Daddy’s International and its 52 percent of Bad Daddy’s Franchise Development in the event of a proposed transfer by Bad Daddy’s entities.
The list of major burger-restaurant that don’t advertise on TV is short. It used to include Ted’s Montana Grill, the 44-unit, Atlanta-based casual-dining concept but the chain, which opened its first restaurant in 2002, now has filmed its first TV spot for use in selected markets.
The 30-second spot mixes a bit of cowboy swagger, the requisite scene of the bison that set its menu apart and glimpses of young adults enjoying food and drink. “This is Ted’s territory,” the voice-over to the spot, titled “Scrapbook,” intones. “Inspired by the Big Sky spirit. And where you’ll know after your first bite that it’s something you’ll find only at Ted’s.” Along with distinctiveness, the message here is “authentic.” The word briefly flashes on the screen early on and returns at the close as part of the tagline, “Authentic American Dining.”
Back Yard Burgers’ thicker, juicier burger
Airing a new TV spot is Nashville-based Back Yard Burgers. Since filing for bankruptcy protection last October, the chain has slimmed down to 83 units in 20 states by closing a number of underperforming locations. In January it brought in a new CEO, David McDougall, whose past experience includes a stint as SVP for QSR operations for Atlanta-based holding company NexCen Brands, which franchises Marble Slab Creamery and other brands.
Back Yard Burger’s new TV spot supports the introduction of its new “Bigger, Better Burger,” a one-third-pound chargrilled Black Angus beef burger touted as being thicker and juicier. Available toppings for the bigger burger are American, Swiss, Cheddar, or Pepper-Jack cheeses; coleslaw, chili, bacon, sautéed mushrooms and jalapeňos. The chain has said it intends to rebuild the brand by focusing on premium-tier menu items, reportedly including items such as tortilla-encrusted tilapia sandwiches. At company-operated units the chain is reintroducing Classic Seasoned Fries, which previously had been removed from the menu. “We plan to reconnect and go back to our roots on those things that have made Back Yard Burgers great,” McDougall told the Memphis Commercial Appeal.
Good Times went to Georgia to source its chicken tenders.
Another regional burger chain, 39-unit Good Times Burgers & Frozen Custard, is airing its first new TV commercials in three years. The Golden, Colo.-based chain was hard hit by the recession and same-store sales tumbled sharply in 2008. It has worked since then to regain its strength and has done so effectively: same-store sales were up 6.2% in 2011 and up 3.2% last year.
The strategy has been to emphasize its position as a high-quality QSR with all-natural Angus beef burgers, fresh-cut fries, fresh frozen custard, etc. In 2012’s fourth quarter, the chain began testing a new chicken platform of all-natural, hand-breaded chicken tenders sourced from Springer Mountain Farms in Mt. Airy, Ga.
Good Times is rolling out the chicken—as both tenders and a chicken sandwich—systemwide now, supported by animated TV spots from agency Stamen Pistil Advertising & Design in Evergreen, Colo. The spots stress that Good Times went all the way to Georgia (in a VW Bus, apparently) to find the best natural, anti-biotic-free chicken it could find. “Happiness made to order” continues as Good Times’ marketing tagline.
Steve Easterbrook, the the former president of McDonald’s Europe who left the chain in 2011 to head PizzaExpress (and who then went on to be CEO of Wagamama Limited), rejoined McDonald’s Corp. as EVP-Global Chief Brand Officer. He’ll oversee marketing, menu development and consumer and business insights. It’s a post Easterbrook previously, if very briefly, held with the chain.
In August 2010, Easterbrook, who had been president-CEO of McDonald’s UK operations since 2006, was tapped to succeed Mary Dillon as global marketing chief. She left to become CEO at U.S. Cellular. Easterbrook barely had time to get new business cards printed before things changed again. In November 2010, Denis Hennequin surprised the company by resigning as president of McDonald’s Europe to become CEO of Accor Hotels Group. And the following year, Easterbrook, too, left the McDonald’s fold.
Now he’s back, this time succeeding Kevin Newell, who recently moved up to the new post of chief brand and strategy officer for McDonald’s USA. Easterbrook reports to Don Thompson, McDonald’s president and CEO. Their immediate task will be to reverse the negative financial trend: McDonald’s global comparable sales declined 1.9% in January and 1.5% n February after being up 3.1% for full-year 2012. Beyond that, the company needs to continue to improve its product portfolio as it fends off challenges not just from other burger concepts but from chicken, sandwich and other food categories it now competes in.
Meanwhile, it’s worth noting that Burger King is looking for a new marketing chief for its UK operations following the departure of Jo Blundell.
Introduction of the Premium McWrap has given McDonald’s image a positive spike among self-described healthy fast-food eaters, according to ongoing research by YouGov BrandIndex. Beginning in mid-March when word spread that McWrap was coming through the beginning of April after its rollout, McDonald’s brand image rose to 44 on March 29 on the YouGov BrandIndex Impression scale, hitting to its highest point this year. It has since settled back to 38.
Source: YouGov BrandIndex
YouGov BrandIndex’s Impression score results from asking respondents: “Do you have a positive or negative Impression of the brand?” YouGov says results were screened for adults age 18 and older who have eaten fast food in the past month and self-evaluate their health as “excellent.” A score can range from 100 to -100 and is compiled by subtracting negative feedback from positive. A score of 0 means equal positive and negative feedback.
The McWrap isn’t an especially low-calorie item. The Chicken & Bacon (Crispy) version with chicken, lettuce, tomato, shredded Cheddar-Jack cheese, spring mix, creamy garlic sauce and bacon in a flour tortilla comes in at 600 calories (the highest for the line). That’s the same as the 6-inch Meatball Pepperoni Melt at Subway, which receives the highest YouGov BrandIndex Impression score among healthy fast-food eaters. And only one McWrap variety (Sweet Chili Chicken Grilled) has fewer than 400 calories.
Last July, McDonald’s launched a campaign touting the number of its menu items with fewer than 400 calories. In September it announced it would disclose calorie counts on its menu board and said it would test an egg-white breakfast sandwich. The Egg White Delight will be available nationally this month. In October 2012, McDonald’s YouGov BrandIndex Impression score hit 48, its all-time high. Its record low was a +3 in January 2011, before its current healthy-eating push.
Still, Subway rates highest on the YouGov scale. Essentially tied for the No. 2 spot are Panera Bread and Wendy’s, which has launched its own new chicken item: Flatbread Grilled Chicken sandwiches. Wendy’s hasn’t seen any appreciable upturn in brand impression from the new item yet, but the product has just been introduced. Ranked below McDonald’s among healthy eaters are Chipotle and Taco Bell, which enjoyed a huge image jump in February with its launch of Cool Ranch Doritos Locos tacos.
Ruby Tuesday has taken off its ill-fitting suit, put its jeans back on and is ordering a cold one and a burger.
James J. “JJ” Buettgen, named president-CEO of Maryville, Tenn.-based Ruby Tuesday last November, told analysts he is continuing to dismantle the efforts by his predecessor—Founder Sandy Beall, who retired after 40 years at the helm—to move 786-unit Ruby Tuesday to a more upscale operation and market image expressed in its now-abandoned descriptor “Simple Fresh American Dining.” Buettgen carefully navigated the delicate matter of changing course, telling analysts that “repositioning out of the bar-and-grill competitive set several years ago was the correct decision.” However, “in our pursuit of a more upscale brand positioning we may have unintentionally overshot the runway,” said Buettgen, who had been SVP-chief marketing officer at Darden Restaurants (parent of Red Lobster and Olive Garden) before joining Ruby Tuesday. He believes the brand needs to move back toward the mainstream.
“Said differently, we believe the biggest strategic opportunity for us is to migrate the Ruby Tuesday brand towards a more casual and approachable positioning and experience that is appealing to a broader guest demographic and suitable for a wider range of dining locations, whether it be a fun night out for dinner and drinks with friends, connecting with family, date night or celebrating a special occasion,” he said.
In seeking to shift from its origins in the bar-and-grill category to a higher-price-point tier, Ruby Tuesday “may have moved a bit too far from its heritage and core guest base,” he said. Buettgen vowed to steer Ruby Tuesday toward becoming “more lively, approachable and fun.”
The back peddling is evident in Ruby Tuesday’s recent TV ads where pricing is emphasized. One TV spot promotes “Over 15 chef-inspired selections for under $15, starting at $9.99.” The past tagline, “It’s All Good Here,” is not used. One of the featured items is the $13.99 Smoky Mountain Chicken, an entrée with grilled chicken topped with smoky barbecue sauce, Cheddar and Swiss cheese and applewood bacon. That dish had been dropped from the Ruby Tuesday menu in the push for more sophisticated items. Now back on the menu, it is one of the chain’s top sellers, Buettgen said. The chain continues to offer nine beef, chicken or turkey burgers priced from $9.49 to $12.49.
Ruby Tuesday will downplay the emphasis on wines by the glass and bottle that Beall had orchestrated. A more mainstream focus on beers and cocktails will return.
TV advertising once again promotes affordability.
The chain says it expects advertising spending to swell to $71 million to $75 million this fiscal year, compared with the $47 million it spent last year. This will be “incremental television advertising expense, which is largely funded by our cost savings initiatives and reductions in promotional spending,” according to the company release. the chain expects to distribute coupons valued at $60 million in the current fiscal year, down from $80 million the previous year. Durham, N.C.-based McKinney handles the account. A review seems possible once Ruby Tuesday fills the vacant chief marketing officer post.
Ruby Tuesday’s menu now is being overseen by new hire Mark Bibby, who joined last month as VP-Culinary & Beverage. Bibby previously was VP-Culinary Operations for Smokey Bones Bar & Grill.
Ruby Tuesday’s results for the quarter ended Mach 5, 2013, were disappointing. Same-store sales declined 2.8% at company Ruby Tuesday restaurants, 1.7% at franchised units. The company forecasts comp sales will be flat for fiscal 2013.
“We believe the initiatives we are working on will shift consumers’ perceptions of the brand toward a more mainstream, lively, and approachable position,” Buettgen said in a release announcing the quarterly results. “We have already introduced a handful of new menu items, and our current advertising and merchandising materials portray a more fun, casual, and affordable personality for the brand. As we broaden the brand’s appeal and make it relevant for more everyday occasions, we will be able to more effectively compete in the marketplace.”
Buettgen also is backing away from Beall’s expansion into non-core concepts. Ruby Tuesday previously announced it would close its Marlin & Ray’s seafood units, as well as well as its fledgling Truffles Grill and Wok Hay concepts. Although it is closing two company locations of the Lime Fresh Mexican Grill concept Ruby Tuesday acquired a year ago for $24 million, Buettgen says the company remains optimistic about the brand’s prospects.
Winning the 2013 A.1. Burger Brackets competition may have been Burgatory’s proudest moment so far, but it was hardly its first recognition. Already this year it was voted “Best Burger in Pittsburgh” by NBC affiliate WPXI and included on Urbanspoon’s list of “Most Popular Restaurant Bars in the U.S.” Last year it was named “Best Burger” by Pittsburgh City Paper, and Burgatory’s marketing agency Wall-to-Wall won a National Gold ADDY Award in the Integrated Branding category for its logo, website, packaging and merchandising work. Burgatory knows how to get noticed and how to win.
The original Burgatory (at Waterworks Mall) plus a burger-and-shake stand in the CONSOL Energy Center (home to the NHL’s Penguins) opened in 2011; a second full-size unit opened last September at The Pointe at North Fayette retail center. Despite its youth, the brand has more than 10,000 Facebook likes and nearly 4,000 Twitter followers, all of whom relentlessly pushed Burgatory to the Burger Brackets championship. The Penguins themselves sent out Tweets urging their fans to support Burgatory. So did the CONSOL Energy Center. When Burgatory made the Brackets’ final round, local TV stations covered it.
What does it do right? Start with 8-oz. burgers that are hormone and antibiotic free. Custom-built burgers start at $8 but customers gravitate to the signature burgers. A Standard Deluxe is $8.50, but fans especially love the $13.50 Meat Your Maker (dry-aged Wagyu beef with sweet onion crust, aged Gruyère, roasted tomato, organic field greens and truffle-shallot aïoli), the $10 Farmer Brown (beef, over-easy egg, maple-cured ham, Farmhouse Cheddar, lettuce and mayo) or the consistently inventive Burger of the Day choices (a recent build included beef with buffalo Cheddar, pulled pork, smoked bacon, red onion, tomato, iceberg lettuce and 100 Proof Bourbon BBQ Sauce). There’s a bison burger and there are Wild Game Saturdays (recently offered was an antelope burger with smoked Gouda, refried lentils, a fried egg, mesclun and plantain chips on toasted brioche). Diners of all ages also come for its huge, thick, hand-spun milk shakes (with or without spirits).
BurgerBusiness.com spoke with Herky Pollock and Mike Hanley—who, along with Jerry Dilembo, are Burgatory’s owners—about the 2013 Burger Brackets champ’s future plans.
How did a two-unit brand manage to defeat a much-loved national chain in the Brackets voting?
Herky Pollock:We have a huge cult following here in Pittsburgh and we’re very well connected through social media and traditional media. We’ve won every “best of” you can imagine in Pittsburgh and a national ADDY for branding. We have a huge following and they’re rabid fans. We rallied the troops and everyone got on board.
There are build-your-own burgers, signature creations, a Burger of the Day and Wild Game Saturday specials.
Mike Hanley: We should mention our crew, too. I would also point out that we have big families who all voted!
HP: Since the Steelers last won the Super Bowl, this is the biggest thing that’s happened! It’s big. Mike and his brother-in-law, Jerry Dilembo. are the founders of Burgatory. It’s been Mike’s baby to build Burgatory from its infancy to where we are today.
Where do you want Burgatory to be tomorrow?
HP: Well, I partnered with Mike and Jerry [Pollock also is an executive vice president with commercial real estate services firm CBRE] to help them grow it with some short- and long-term strategies. One day we hope to be one of the “big boys” and venture into the private-equity world and perhaps even go public some day. Private equity is the way of the present and the future, and we hope to ride that one day.
How many Burgatorys can you open in Pittsburgh? Are you already thinking outside the area?
HP: We hope to open six to seven in Pittsburgh and have a huge market share here. Then we think we’ll look to go out of this market in 2014 or 2015 at the latest.
We have three more locations in development now: One in the Waterfront development downtown, another in The Gardens, a mixed-use center near Market Square, and a third is planned for Blue Spruce Shoppes in Murrysville, Pa.
You obviously have very loyal customers. What is it that brings people back the way Burgatory does?
MH: It begins with the product always and we’re serving really great food. All our meats are all natural, humanely raised with no antibiotics or growth hormones. I think that resonates well with a large majority of consumers and will only get more important and popular.
We’ve created a relaxed atmosphere that doesn’t look like a typical chain restaurant. It has some fun elements and a refinement as well. And I think we connect so well with our guests because we begin by connecting well with our crew. We try to put our crew first and our customers second because if we don’t take care of our people, they can’t take care of our guests.
HP: I agree that the totality of all those things working together is the key. We are huge fans of retail: We’ve studied what Apple and Google have done. The overall experience—food, staff, everything—is what we’re selling. The better the overall experience, the longer customers are going to stay and the more loyal they’re going to be for the long term.
I was taken by how many votes for you mentioned Burgatory’s great staff.
MH: Thanks. But you should know that many of those who did that probably were prompted by their server! But Herky will confirm that I was worried, going into the Brackets competition. I didn’t want to make dining a project for people. We wanted to win but we wouldn’t want to put a burden on our customers. But they really, really got into it! We received lots of phone calls from people asking when they could vote.
HP: There was a blog that one of our customers created for us to get the vote out. You’d pay good money to have that done for you and he just did it without our asking. We have a huge following and we’re very grateful for that. But we look around the country and we see what Ted’s Montana Grill, The Cheesecake Factory, B.J.’s and the other top concepts do: Their customers and their staff are gold to them. That’s how we hope to treat our people and customers. Click here to continue reading Burgatory Looks to Extend Its Championship Season
Red Robin Gourmet Burgers’ new advertising campaign focuses on burgers while simultaneously promoting its variety. “24 burgers. A million reasons” is the new tagline from Vitro, selected as national creative agency of record in January.
The new face of Red Robin is an adult face.
Three new 30-second TV spots all feature the same unnamed young woman (at r.) who, like Wendy’s “Red” character, is the new face of the brand. Importantly it’s an adult face that isn’t accompanied by children’s faces as Red Robin moves to remake itself as a more adult-centered brand that also welcomes families. One spot, “Liars,” promotes Red Robin’s popular Bottomless Steak Fries feature. “Burger Daddy” spotlights the $6.99 Tavern Double Burger the chain introduced as a lower-price entry burger last year. The third spot, “Hard Work,” touts Red Robin’s burgers being voted tops among full-service restaurants by Zagat for the past four years. The new campaign replaces the “Yummm” effort from past agency Periscope.
The new ad campaign’s focus is in line with the “brand transformation” efforts that Red Robin CEO Steve Carley has been telling Wall Street about over the past year. As he explained during February’s Q4 earnings call, the transformation involves “not just new paint and wallpaper. It’s enhancing our service, our menu, our food presentation and every single other guest touchpoint that cement Red Robin’s position as the go-to-place for families and kids and additionally, places firmly in the consideration set for adults, spending a night out as a couple or with friends.”
New $3,, $5, $7 and $9 appetizers have been added.
New engagement upgrades are being tested in selected Red Robin locations now. Carley said results wouldn’t be in until Q3 but the chain is rolling out a new spiral-bound menu and shifting to real china from paper-wrapped burgers in plastic baskets. A premium-price burger line also is in the works.
But Red Robin knows it needs to promote more than burgers to draw customers. “We have traditionally, of course, focused on our core offering of our burgers. But we think we have upside relative to the category on both appetizers and desserts,” Red Robin SVP and Chief Menu & Marketing Officer Denny Marie Post said during the February analyst call. Looking to capture expanded appetizer business, Red Robin this week has introduced a new tiered pricing approach to starters.
Appetizers are priced at $3, $5, $7 or $9. The $3 tier includes to new items: a Mini Wedge Salad, and Yukon Chips and French Onion Dip. At $5 are the O-Ring Shorty, a smaller version of Red Robin’s onion tower; a half order of new Bar Wings ‘n’ Yukon Chips; and previous faves such as Pretzel Bites. The $7 level has three returning apps, including Chili Chili Con Queso. At $9 come new Saucy Pork Riblets and a full order of Bar Wings ‘n’ Yukon Chips.
Red Robin’s two latest limited-time menu specials have been past favorites: the Chili Chili Cheeseburger and most recently the spicy 5 Alarm Burger.