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Independents Power Burger Boom

Proving more vibrant than many had predicted, the limited-service burger category continues to grow faster than the overall restaurant industry. And independent, corner burger restaurants are powering that growth, not McDonald’s or Shake Shack.

According to NPD Group’s Spring 2014 report, the overall restaurant (all types) count is up 0.8% since its spring 2013 census. The limited-service burger category has grown a bit more, increasing 0.9% to 51,263 in the past year.

The chain burger count rose just 0.3% to 45,047 in the past year. Although chains continue to account for the majority of the category, independents have increased their share of the burger category to 12.1% from 11.5% in spring 2013.

Over the past four years, independent burger joints have consistently outgrown their limited-service chain counterparts (see chart). In the past year, NPD counts a net gain of 354 independents and 114 chain locations. Overall, quick-service restaurants (all types) increased units to 337,667, up 2% (more than double the total industry growth). Burger restaurants account for 15.2% of all QSRs, according NPD’s census.
NPD Burger Units 2014

Five Guys Extends Milkshake Mix-In Test

Five Guys Burgers & Fries, known for its simple menu that doesn’t include a milkshake, has made its milkshake test official and has added a social-media promotion to support it. In New York (14 stores), New Jersey (five), Virginia (three) and North Carolina (one), the chain is testing vanilla shakes with 10 mix-in choices.

FiveGuys_MixIns2Ingredients offered to customize the shakes are bacon, cherries, Oreo cookies, bananas, salted caramel, peanut butter, coffee, chocolate, malted milk and strawberries. The chain says customers can add as many of these mix-ins as desired.

Pricing may vary but at the test store in Alexandria, Va., a shake is $4.49, no matter the number of add-ins.

Five Guys has been testing shakes in selected stores since the spring. Now it is inviting customers to get involved via social media. Customers can upload photos of themselves and their shake creation and also share it on Twitter with a #ShareYourShake hashtag. Every Friday the chain will spotlight one shake and give its creator a t-shirt.

Five Guys has grown rapidly to become the No. 8 burger chain. Sales in 2013 were $1.1 billion, but Technomic notes that sales growth slowed to 5% last year, compared with a 14% increase in 2012. The researcher says this “illustrates the segment’s maturity as larger metropolitan markets hit saturation.” That shift in the market may be pushing Five Guys to add milkshakes despite its previous vow not to do so.

Hopdoddy's Almond Joy Shake

Hopdoddy’s Almond Joy Shake

Like quirky craft beers, creative milkshakes have become core items at many burger bars and small chains. Many offer monthly burger and shake specials. At Wayback Burger locations, for example, the August specials are a Wild Berry Shake and Fried Pickle Bacon Burger. Rockit Burger Bar in Chicago recently unveiled its Doughnut Milkshake. It starts with a doughnut purée made with glazed doughnuts, cream, vanilla bean and sugar. The purée is added to vanilla bean ice cream with milk and blended together. Each glass is garnished with two lemon-glazed doughnut holes. Hopdoddy Burger Bar locations in Austin and across Texas are featuring an Almond Joy Shake Special (with house-made vanilla ice cream, coconut cream, almond butter, chocolate sauce and toasted coconut).

Flip Burger Boutique in Atlanta and Birmingham features a Nutella & Burnt Marshallow shake as well as a Foie Gras Shake. Grub Burger Bar locations in Texas and soon Philly!) are featuring a Bananas Foster Shake and braised pulled-pork burger.

The Red Robin Gourmet Burgers chain introduced the Mango Moscato Wine Shake earlier this year after having earlier concocted the O’Fest Beer Shake. Legendary Paul’s Da Burger Joint in New York City is adding a St. Mark’s Bailey’s Irish Shake to its menu to go with new Second Avenue Sliders.

Red Robin: Marketing Errors Hurt Sales

Red Robin Gourmet Burgers’ management stepped up and took responsibility for disappointing Q2 results. CEO Steve Carley said a number of factors contributed to the results but said the biggest contributor was that its “marketing strategy fell short” this summer.

Colussus. DinnerMovieFor the quarter ended July 14, 2014, the chain reported a 7.5% increase in revenues but net income fell to $9.5 million compared with $11.1 million a year ago. Same-store sales were up 1.2% but only because a 3.7% boost in average guest check overcame a 2.5% decrease in guest traffic. Carley cited an “intensely competitive environment” with increased discounting by other chains as contributing factors. But in the end, Red Robin had created its own problems, he said.

CMO_SVP Denny Marie Post didn’t sidestep responsibility for marketing’s role in the quarterly report. “While I appreciate you highlighting the competitive environment, it is the marketing team’s responsibility to anticipate those issues and successfully lap results year over year no matter how challenging the competitive environment,” Post said.

Post’s mea culpa included three marketing issues that resulted in the soft sales. One was “poor choice” in what advertising to air early in the quarter. Red Robin’s popular and popularly priced Tavern Double burgers weren’t promoted. “The advertising didn’t focus on news that drives traffic,” said Post. “We have a great value proposition in the Tavern Double and a lot of people still don’t know about that.” Click here to continue reading Red Robin: Marketing Errors Hurt Sales

The Best of Bon Appetit’s Best

Chef Michael Scelfo’s “secret burger” set off a social-media frenzy when he ran the kitchen at Russell House Tavern in Cambridge, Mass. He’d tease diners on Twitter or Facebook with hints about the day’s off-menu burger until they just had to have it. Last year he opened his own restaurant across town, Alden & Harlow, and the “secret burger” went with him.

Eggslut's Cheeseburger

Eggslut’s Cheeseburger

Scelfo prepares maybe three dozen of the burgers daily and hangs on to some so staff from other restaurants might get one on Alden & Harlow’s late-night menu when their shifts end. It’s listed on the menu as “Our 8-oz. House Creekstone Grind, Your Faith, House made Roll. $14. (limited availability).”

Alden & Harlow is included among 50 finalists this week for Bon Appetit magazine’s “America’s Best New Restaurants of 2014” honor. It also is one of just eight of these 50 restaurants to have the courage to create a burger for their menus. Menuing roasted garlic chicken is easy. Creating a great burger worthy of a great menu is difficult. Eight did it, including a Turkish restaurant. In addition to Alden & Harlow, they are:

Acorn, Denver
Oak Grilled Double Cheese Burger: Harissa aïoli, Gruyère cheese, tater tots; add fried egg, fried pickle, avocado or tender belly bacon for $1 each ($13; lunch)

CBD Provisions, Dallas
TX Grass Fed Beef Burger: Texas Cheddar, pickles, potato bun (both lunch & dinner) Click here to continue reading The Best of Bon Appetit’s Best

Restaurant Industry Unit Growth Sluggish

NPDCount_2The NPD Group says the total number of U.S. restaurants stood at 635,494 in its Spring (March) 2014 count. That’s flat compared with the 633,043 count for Fall 2013 and shows growth of just 0.8% since the Spring 2013 census.

The 351,359 independent restaurants in the Spring 2014 count account for 55.3% of the total. That’s down slightly from 55.5% in Spring 2013 but up a bit from a 54.7% share in Spring 2012. NPD says the number of independents declined by 71 since last fall but is up 0.4% (1,284) compared with a year ago

Chain restaurants’ share of the total number of restaurants stands at 44.7%. NPD says the number of chains has risen by 3,718 over the past year while independents have added 1,284 restaurants since the Spring 2013 count. Since Spring 2012, however, the number of independent restaurants has increased by 13,654; chain restaurants have increased by just 7,380.

Customer visits to major chain restaurants was flat for the 12 months ended June 2014, NPD says. Traffic for independents has dipped 1% over that period.

Quick-service restaurants continue to grow in number while the full-service category drifts lower. NPD counted 337,667 QSRs, a 2% gain from a year ago, but the 297,827 full-service restaurants was down 2,156 or 2% from Spring 2013.

For the year ended June 2014, NPD says the total number of consumer restaurant visits was flat compared with the previous year. QSR traffic was flat but casual-dining visits were down 3% and midscale restaurants saw a 4% decline.

Said Greg Starzynski, director-product management, NPD Foodservice: “Prior to the recession when industry traffic was strong and money was more available, the industry expanded units rapidly but in today’s market unit growth must be a calculated risk.”

Applebee’s Readies ‘All-In Burger’

A "leaked" video teases Applebee's new burger.

A “leaked” video teases Applebee’s new burger.

Applebee’s is preparing to introduce a new burger platform, the “All-In Burger,” on August 18 in its first major burger campaign since 2009’s “RealBurgers” effort.

A clumsy social-media campaign is teasing the introduction. On Facebook and Twitter Applebee’s has been directing attention to a YouTube video showing how the new burger is prepared. Applebee’s first made a show of acknowledging the validity of the video. On Facebook today, the chain “apologized” for the leak “& any cravings it might have caused.” Crispin Porter + Bogusky is Applebee’s ad agency. Janney Montgomery Scott analyst Mark Kalinowski advised clients today that the burger will hit stores next Monday.

Chceckers_ParmesanFriesThe “All-In” name refers to the smashing of the ground beef into its toppings—chopped onion, bacon and pickles—so that those ingredients are included in the patty. The burger also gets a slather of “signature sauce” and is served on a brioche bun. Earlier this year, Jack in the Box introduced the Bacon Insider, a burger with bacon blended into the patty and served on a brioche bun.

Applebee’s 2009 “RealBurgers” campaign back a five-item line of premium burgers priced at about $9. The number of All-In Burger varieties and pricing aren’t yet known.


Addendum: recently reported on the increase in upscale french fries as a way to have menu news without launching disruptive entrées. McDonald’s test of “shaker” fries and Back Yard Burgers’ lunch of Garlic Parmesan Waffle Fries were offered as examples.

Now Checkers/Rally’s has created Garlic Parm Fries and Stix. These are seasoned fries and mozzarella sticks drizzled with a garlic-Parmesan butter sauce and grated Parmesan.

Social Media Drive Chicken Fries Return

BK_ChickenFries.350Any lingering doubts about social media’s influence on QSR menu development are dispelled by Burger King’s revival of Chicken Fries.

Introduced in 2005 and dropped from the menu in 2012, Chicken Fries have been a social-media topic ever since, according to Burger King CMO-North America Eric Hirschhorn. “Literally from the day Chicken Fries left the menu there has been an incredible outcry on social media to bring them back,” he said.

But a post in January 2014 on Buzzfeed, “35 Things From Your Childhood That Are Extinct Now,” that included Chicken Fries “really lit the fire” under the chain’s determination to bring the item back. Hirschhorn called it an example of how it has “leveraged social-media listening.”

Chicken Fries return as the same product—“white meat chicken coated in a light crispy breading seasoned with savory spices and herbs” and shaped like fries—but the packaging is different although still sized to fit car cupholders.

In line with Burger King’s determination to keep operations and menu as simple as possible, Chicken Fries return only as a 9-piece pack for $2.89. The 6- and 12-piece options have been dropped because most consumers bought the 9-piece size, Hirschhorn said.

Marketing for the product will be almost entirely via social-media channels. The exception is that Burger King will air original TV spots from the 2005 launch only on Thursdays in a nod to the popular “Throwback Thursday” fad on, yes, social media. Additionally, Burger King has teamed with eBay for a fan page through which Chicken Fries fanatics can buy a variety of apparel and accessories. The eBay page will go live on August 12. Profits from the merchandise go to the chain’s McLamore Foundation.

Chicken Fries are scheduled to be on the menu for three months, “but there’s so much demand, they may not last that long,” said Hirschhorn.

McDonald’s Value Test: $4.99 Combo Bag

McD_$4.99ComboBag_205The “meat-and-three” is a Southern restaurant tradition. Diners choose an entrée plus three side dishes to accompany it. Given that it’s appropriate that McDonald’s is testing a “meat-and-two” twist on its Dollar Menu & More in selected stores in Georgia.

The $4.99 McDonald’s Combo Bag invites customers to choose one sandwich from among four Dollar Menu & More options: Double Cheeseburger; Bacon Cheddar McChicken Bacon McDouble; or Bacon Ranch McChicken.

Next customers choose two sides from among medium fries, a 4-piece Chicken McNuggets pack, a side salad, pie or sundae/cone. They complete the meal with a beverage, choosing from among a medium soft drink, medium sweet tea, bottled water or medium iced coffee. A small McCafé shake or frappe can be added for an additional $1.

The Combo Bag isn’t a flashy innovation. But it is in line with the company’s belief that it needs to simplify its menu and operations and focus what CEO Don Thompson calls the chain’s “foundational elements.” In the Q2 conference call on July 22, Thompson said the first of those core elements is value. “We are evaluating the relationship between pricing and quality perception across our menu board and that’s because value is one of our grand pillars. So we must continue to fortify our position within this key consumer attribute.”

As QSRs’ promotional focus shifts to side dishes, will consumers perceive McDonald’s Combo Bag as a better value than Burger King’s “2 for $5” offer or KFC’s “$5 Fill Up Meals”? That’s what McDonald’s is testing in Georgia without adding any new menu items. If the value perception isn’t there, McDonald’s will try something else because standing still clearly isn’t an option.