May 2014

Everything You Need to Know About China and the Fast-Food Breakfast Wars

What are the fast food breakfast wars? An increasing number of fast-food franchises are making forays into the world of breakfast and they’re all looking for market supremacy. Taco Bell recently inaugurated a breakfast menu, featuring the waffle taco, a syrup-drenched, meat filled kind of breakfast sandwich, and Burger King, Starbucks and Jack in the Box have all also introduced new breakfast items over the last few months.

Why is China important? China has a vast middle class that will only continue to grow, making it the ideal spot for established brands looking to enter new, emerging markets and a crucial battleground for the breakfast wars.

China has long been a crucial contributor to Yum Brands revenue. The brand has 6,332 total restaurants, including 4,618 KFCs and 1,308 Pizza Huts. Yum Brands are increasingly dependent on the Chinese market for economic success. For example when China’s KFC’s suffered last year due to concerns over the bird flu it dragged the entire brand down. Furthermore, the Yum Brands plans to expand within the country. “Given the strength at both KFC and Pizza Hut, we expect to open at least 700 new restaurants in China this year as we further capitalize on our leading position in the No. 1 retail opportunity in the world,” Yum Brands CEO David Novak said in a statement.

In part because of Yum Brands success, McDonald’s is looking to get in on the action. In order to enhance their appeal in the country McDonald’s is working on revamping its entire image. The franchise is redesigning restaurants in Beijing, Shanghai and Guangzhou using a local designer and burger chain has added items with a more local appeal to the menu, including green tea ice cream this year and rice dishes last year. The franchise is also even recruiting an American star for China-focused commercials, with an upcoming LeBron James-centered ad campaign.

Who is winning the fast food breakfast wars? McDonald’s has historically dominated the breakfast market. The company has doubled its McCafe menu in recent years and in 2012 breakfast accounted for roughly $10 million in sales. That figure accounts for roughly one-third of all $37 million in breakfast sales in the entire fast food industry. However, the array of different franchises offering breakfast options could mean a challenge to McDonald’s supremacy. The bottom line is that whoever can gain a foothold in China will certainly have a leg up.

 

References:

http://www.entrepreneur.com/article/233339

http://www.slate.com/blogs/moneybox/2014/04/02/breakfast_wars_mcdonald_s_taco_bell_dunkin_donuts_and_fast_food_sellers.html

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

This Exotic New Franchise Is Serving Dinner in the Sky

Imagine this: You’re dangling in the air hundreds of feet above the ground, enjoying a sublime meal and stunning views of a majestic city skyline. Sounds like a dream, right? Well Belgium-based company Dinner in the Sky can make that dream come true. The product of a joint venture between David Ghysels, owner of a marketing and communications company; bungee-jumping impresario Stefan Kerkhofs; and the Jeunes Restaurateurs d’Europe association, the company hoists daring dinner guests into the air at tables suspended from cranes.

But don’t worry; you don’t have to travel to Belgium to make this dream a reality. Dinner in the Sky is a franchise. After the trio’s first sky-high dinner rendezvous in 2007, they began receiving calls from all over the world from clients who wanted to replicate the act. Now, seven years later, the company’s American franchisee is about to open the first Dinner in the Sky location in Las Vegas.

The franchisee, Janeen Hinden, the owner of a Las Vegas wedding chapel and event-planning and catering businesses, came across Dinner in the Sky at a trade show in 2008 with her late husband, Michael. The two thought the unique dining experience would make a perfect addition to Las Vegas. They tested the idea, holding a sky dinner New Year’s Eve experience with friends and family, and it was deemed a hit. They rented a crane and did a three-month test run and were met with resounding success. “It was a phenomenon,” Hinden said, citing multiple repeat customers. “There was so much media exposure.”

The couple eventually ditched the cranes and built build two permanent Dinner in the Sky towers, with tables that can be raised and lowered multiple times each night and other event facilities at the bottom. The official opening of Dinner in the Sky has been delayed several times, in part because of the process of seeking out FFAA approval, but Hinden expects to take diners into the Vegas sky this year.

So, what exactly does this unique experience entail? Well, most nights start off with a few courage-building cocktails and liability waivers, Hinden said, in a lodge situated on the ground between the two towers. Once guests, who pay $500 each for the experience, have built up their courage and signed the necessary paperwork, they are hoisted about 180 feet into the air. “It’s actually quite an adrenaline rush going up,” Hinden said. “But once you settle in at 180 feet and see the red rocks and canyons, it’s a calming, peaceful, beautiful experience.” Most food prep takes place on the ground, but chefs put the finishing touches on the meal in the air. Tables seat up to 44 guests, and each table has three 90-minute seatings per night.

Hinden hopes Dinner in the Sky will be a destination for birthday parties, weddings, and other special events and is already making plans to open additional locations, searching for properties in Miami, New York, San Diego, and Hawaii. As for Dinner in the Sky, it’s already looking to expand to additional countries. “Dinner in the Sky is a global concept but must be implemented locally according to the local habits, commercial potential, and weather conditions,” Ghysels said. “So it will remain a marketing tool in countries that don’t have 250 days of nice weather, like Western Europe. But it could evolve as a permanent unique restaurant in cities with different conditions.”

Source:

http://www.entrepreneur.com/article/230306

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

Restaurant Franchises Prepare for FDA Crackdown on Salt

Earlier this month, Food and Drug Administration Commissioner Margaret Hamburg told the Associated Press that the FDA is preparing voluntary sodium intake guidelines for the food industry in hopes that the industry will reduce sodium levels in foods. Hamburg told the press that sodium is “of huge interest and concern” to the agency, citing the negative health consequences of too much sodium intake.

The guidelines are a response to American’s ballooning salt intake. The FDA estimates that about 90 percent of Americans consume more sodium than they should, which increases the risk of heart disease, high blood pressure, kidney disease, and stroke, as well as a host of other health problems. The majority of excess American salt intake (about 77 percent) comes from packaged and restaurant food, making those industries prime targets for the looming crackdown.

“We believe we can make a big impact working with the industry to bring sodium levels down, because the current level of consumption really is higher than it should be for health,” Hamburg said.

However, sodium is undoubtedly a staple in the food industry, and it is no secret that consumers love flavor-rich, salt-laden foods. “We know sodium reduction remains a top priority for many of our customers within the food industry,” John MacKinnon, Morton Salt’s director of technology and innovation, recently explained. “We also know that taste is still king with consumers,” he added. In addition to flavor, companies use sodium to increase shelf life, prevent the growth of bacteria, and improve texture and appearance. That makes it more difficult to remove from some products.

In order to give companies ample time to prepare, find sodium alternatives, and appropriately make product adjustments, it is likely that gradual change will be encouraged. This will also give consumers’ taste buds a chance to adjust. “I think one of the things we are very mindful of is that we need to have a realistic timeline,” Hamburg said.

While the guidelines to be introduced will be voluntary, many feel that mandatory guidelines are essential to facilitate any kind of real change. “As the clock ticks, America’s blood pressure, along with health costs due to chronic disease, continues to rise,” said Sen. Tom Harkin, chairman of the Senate committee that oversees the FDA.

However, the guidelines could help to facilitate an industrywide shift toward lower sodium options. Some franchises have already begun to make changes. In fact, many food companies and retailers already have pushed to reduce salt. Wal-Mart, for example, pledged to reduce sodium in many items by 25 percent by next year, while food giant ConAgra Foods said it has already made a 20 percent sodium reduction and Subway said that it has made a 30 percent reduction restaurant-wide.

 

Sources:

http://bigstory.ap.org/article/fda-prepping-long-awaited-plan-reduce-salt

http://www.heart.org/HEARTORG/GettingHealthy/NutritionCenter/HealthyDietGoals/The-Effects-of-Excess-Sodium-on-Your-Health-and-Appearance_UCM_454387_Article.jsp

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

Subway Seeks to Expand, Revamp its Menu

There are currently 26,000 Subway eateries in the U.S. But according to Subway CEO Fred DeLuca, there is always room for more. DeLuca recently announced that he believes that there is room for another 8,000 Subways in the U.S. “Maybe it will take 10 years or so,” he commented. “If we do a good job building consumer demand, that number might change and be higher.”

In addition to its plans for expansion, Subway is also looking to revamp its menu in attempt to maintain its appeal to health-conscious consumers. DeLuca disclosed that the sandwich franchise has recently been offering hummus (a spread of mashed chickpeas) as a sandwich topping. The trial is currently being conducted at about 1,000 stores. “We have to see how consumers respond to it,” Subway Chief Marketing Officer Tony Pace recently explained. “It may warrant additional testing or expanded testing, and then we’ll see how it goes from there.” Pace added that he thought hummus would be a nice complement to veggie and chicken sandwiches.

Subway also is reportedly testing thinner slices of meat. While tests are currently limited to restaurants in Illinois, franchisees have found that 12 thinner slices of meat on a foot long (compared to the current eight thicker slices) increases customer satisfaction by changing the customer’s perception of how much they’re getting and heightening their appreciation for the sandwich.

Even without an additional 8,000 stores, Subway still reigns as one of the United States’ largest and most successful fast-food franchises. DeLuca, 66, opened the first Subway sandwich store in 1965 in Bridgeport, Connecticut. Since then, the company has expanded through franchising, attracting customers with lower-calorie and reduced-sodium submarine sandwiches. Its growth abroad has also accelerated substantially in the last decade. Sixty-seven percent of Subway shops are now located outside of the U.S., and the company is always looking to expand into international markets, exploring possibilities in Brazil, the U.K., and India. Subway now has more than 41,700 stores worldwide, making it larger than McDonald’s in terms of locations.

 

References:

http://www.entrepreneur.com/article/233720

http://www.bloomberg.com/news/2014-05-06/subway-tests-hummus-as-ceo-sees-8-000-more-u-s-eateries.html

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

The Great Ronald McDonald Makeover

McDonald’s has recently given Ronald McDonald, its iconic, red-haired mascot, a makeover. The 51-year old clown has ditched his jumpsuit for a more fashion-forward assemble, which includes cargo pants and a vest accompanied by a classic red-and-white striped rugby shirt. The trendy new assemble was designed by the talented Ann Hould-Ward, who won a Tony Award for her Beauty and the Beast costumes and also received nominations for “Into the Woods,” and “Sunday in the Park with George.”

“Designing new clothes for Ronald McDonald was one of the highlights of my career,” Hould-Ward recently explained. “I’ve worked with some really big names over the years and suiting up a living legend was a real thrill.”

Fans needn’t get too distraught over the changed look, however. Ronald McDonald does still have his funky red shows and his iconic bow tie, though McDonald’s explains it will be reserved for special occasions. Also for special occasions is a fashionable new blazer, described as “whimsical.”

Also part of the makeover? Ronald McDonald is now on social media. “For the first time, Ronald McDonald will take an active role on McDonald’s social media channels around the world and engage consumers using the #RonaldMcDonald hashtag,” reads a McDonald’s press release announcing the makeover.” The redesigned Ronald McDonald will also be appearing in television ads and promotional materials later in 2014 and McDonald’s restaurants owners and operators will also have the option to incorporate the revamped mascot in design elements in the coming years.

Many contend that the iconic fast food franchise clown is just trying to keep up with the times while others attribute the makeover to McDonald’s slipping sales in the first quarter of 2014. Just last Tuesday the chain announced that same-store sales in the U.S. decreased 1.7 percent in the first quarter. The franchise’s total first quarter profit came in at $1.2 billion – a 5.2 percent drop from 2013, and short of analysts’ predictions. The company attributed the decline to Donald’s blames the low traffic on the winter weather and “challenging industry dynamics.”

Only time will tell whether this makeover will help the franchise to boost sales. Overall, however, the makeover is quite significant, showing that even iconic, well-established brands need to adapt to evolving times.

 

Sources:

http://news.mcdonalds.com/Corporate/news-stories/McDonald%E2%80%99s-Unveils-New-Mission-and-Image-for-Brand

http://www.entrepreneur.com/article/233373

http://www.entrepreneur.com/article/233297

http://www.businessinsider.com/ronald-mcdonald-is-getting-a-makeover-2014-4

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

Starbucks Proves That It’s about More than Just Coffee

Vanilla lattes and caramel frappes might the first thing to come to mind when you think of Starbucks, but this global franchise is looking to move beyond coffee. The coffee giant recently announced that it would begin serving handcrafted carbonated beverages known as “Fizzios” in 3,000 stores across the U.S. and in global markets, such Singapore, South Korea, and China, by the end of year.

Starbucks began testing these handcrafted sodas in Atlanta, Georgia, and Austin, Texas, late last year. Currently, the chain offers three soda flavors, Golden Ginger Ale, Spiced Root Beer, and Lemon Ale. However, Starbucks also reportedly plans to add additional, locally relevant flavors this summer. The sodas are made by staff and are carbonated immediately after customers order.

In order to bring these handcrafted carbonated beverages to customers, it looks like Starbucks is eyeing a deal with well-known carbonated beverage machine company SodaStream. Israeli business news website Globes reports that Starbucks is in advanced talks to take a 10 percent stake in the company, something that could result in a $1.1 billion deal.

All in all, these new carbonated drink offerings are just one part of Starbucks’ multifaceted expansion plans. Earlier this year, Starbucks announced that certain shops would begin selling selected wines and beers in the evenings. In an attempt to bolster its foods offerings, the franchise has also been increasingly emphasizing lunch menu items. Just last year, the brand rolled out of a variety of La Boulange pastry items, and the company has reportedly been testing a number of new items.

Ultimately, whatever Starbucks is doing, it appears to be working. This year there are plans to open another 1,500 locations, including 600 in the Americas. The company continually reports healthy gains in sales in spite of the fact that many food franchises are continually lagging.  Same-store sales rose 6 percent in the U.S. in the second quarter, and the company earned $427 million, up from $390.4 million a year ago.

References

http://abcnews.go.com/Technology/wireStory/starbucks-profit-climbs-us-sales-increase-23461258

http://www.globes.co.il/en/article-starbucks-in-advanced-talks-to-buy-sodastream-stake-1000933553

http://www.entrepreneur.com/article/233422

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.

Auto Industry Boom Helps to Spur Franchise Industry Growth

There is good news in the franchise industry! Last month, the U.S. added an impressive 25,000 franchise jobs, according to the ADP National Franchise Report. That’s a pretty significant jump up from October, which saw 16,970 new franchises jobs added — an increase of almost 9,000 jobs. It also exceeds the 6-month average of 22,000. All in all, more jobs is good news for franchising. But what is driving this extra growth? Well, the franchise industry should sending its thanks to the auto industry.

“Franchise jobs added increased sharply in November to a level not seen for several months,” Ahu Yildirmaz, vice president of ADP Research Institute, explained in a recent statement. “Much of the rebound came from the auto parts and dealers segment, which added about 5,000 more jobs than in October.”

The auto industry’s performance has historically been unpredictable, but it appears a boom in the last month or so is helping to drive franchise industry growth. In October of 2014, auto parts and dealer franchises only added 630 franchise jobs across the U.S. Last month, however, that jumped up to a staggering 4,740.

Less surprisingly, the restaurant industry also helped to spur growth. Typically an engine behind growth in franchise jobs, the industry added roughly 11,820 jobs last month. In addition, the accommodations industry added about 1,820 jobs, the business services industry added 1,660, food retailers added 1,060, and the real estate industry added 420.

Article by Jason Duncan, CEO/Founder of ManagerComplete.com. ManagerComplete is an online software application that helps multi-unit franchises manage operations effectively. Follow him on Twitter for latest updates.