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July 2013 Newsletter

Jul 16, 2013

Greetings!

It seems like the CEO of Chick-fil-A may have stepped in trouble again, with his recent tweet about the Supreme Court’s decision on the Defense of Marriage Act. This time, his handlers were much quicker to distance the company from the comment than they were a year ago. But the controversy has got us thinking about how inclusive this industry actually is, not only as a service to customers but also as an employer. Inclusive of gays and lesbians, of immigrants, of blacks and whites, of the young and old, disabled and able-bodied. Just last month, for instance, W Hotels announced a partnership with the Human Rights Campaign called Pride 365.

Critics may label restaurants as an employer of last choice, but anyone who runs a restaurant will tell you how important every potential labor pool is, not to mention every customer.

This message is brought home by a public that is becoming increasingly concerned about employee welfare—look what’s happening to Wal-Mart. Closer to home, a number of restaurant chains that announced labor cutbacks in advance of the Affordable Care Act were treated to a noisy backlash.

The National Restaurant Association, meanwhile, has been vocal in its support of a bill that offers a pathway to citizenship for illegal immigrants, about 1.4 million of whom work in the industry.

We’re proud to be part of an industry that has consistently welcomed customers and employees of all stripes into its fold.

To your success,

Dean Small and Danny Bendas

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National Menu Labeling – When?

More important than what will be in the bill is when will the specifics of this regulation come out? Even the Food & Drug Administration (FDA) can’t tell us and they were assigned to the task.

As you know, menu labeling was added to the Affordable Care Act (“ObamaCare”) and was assigned to the FDA to design and implement. That design was supposed to be done by the end of 2012 and implementation guidelines to be in the hands of operators by now. When the FDA was asked why they have not produced those regulations as of yet, they responded with:

“There are very, very strong opinions and powerful voices both on the consumer and public health side and on the industry side, and we have worked very hard to sort of figure out what really makes sense and also what is implementable… menu labeling has turned out to be one of the FDA’s most challenging issues.”

menulabeling

With substantial input from the industry, the FDA understands now that there are many issues with portioning, self-serve items such as salad bar and all-you-can eat specials, and the application of toppings by customers such as syrup and butter (which renders any analysis void if not considered). We will continue making sure that the FDA is aware of our concerns as they craft this plan.

Some restaurants already label their menus in various cities and counties across the U.S. The restrictions on these restaurants vary greatly in this patchwork of rules. The federal program is expected to override state and local initiatives, therefore making menu modifications and compliance easier for large chain restaurants. We will wait to see if that is in fact what they do.
How soon can we expect implementation once they get their act together and propose the rules? The FDA has indicated that from time of initial presentation, implementation will be at least 6 months. Even though the FDA is substantially behind on this project, we still expect the 6-month timeframe to be adhered to. We will keep all of you posted as new information becomes available.

The FDA is busy on another front as well—that of creating food safety regulations for producers under the Food Safety Modernization Act of 2010. The first of two main rules in this Act proposes requiring food manufacturers to develop formal plans to prevent their products from causing foodborne illness, and corrective steps if problems arise. The second rule proposes setting enforceable safety standards for the harvesting of fresh fruits and vegetables. We continue to monitor implementation of this program for possible cost implications. As you all know, we don’t need any greater upward pressure on our food supplies.

If you are interested in ensuring that your organization remains compliant with all new regulations (state or Federal), feel free to contact Dean Small or Danny Bendas at Synergy.


Hot New Concepts 2.0

By Joan Lang

There may be nothing new under the sun, but there are certainly new ways of packaging it.
This has been going on in the restaurant industry since, well, not exactly the dawn of recorded civilization but for some time now. White Castle (1921) begets McDonald’s (1940) begets Back Yard Burgers (1987) begets Shake Shack (2004).

The mom and pop pizzeria morphs into artisanal pie shrine Co. (and in the meantime, the handmade pie format gets taken up by the likes of Domino’s and Uno Chicago Grill). And the old-fashioned diner gets totally remade in postmodern style at Au Cheval, with its foie gras scrambled eggs and fried housemade bologna sandwich.

Tapas and tacos and Thai food have all been reinterpreted by a new generation of ambitious young chefs and restaurateurs.
Some of the newest and most exciting restaurant concepts today are retreads of styles or cuisines that have been under the food-sophisticate radar until now, as one by one the ethnic cuisines and iconic restaurant styles move into new territory.

Some examples:

• The New Wave Deli – It stands to reason that a menu format that encompasses foods that are cured, smoked and pickled would get an upgrade. Shorty Goldstein’s, in San Francisco, in fact touts these ancient food preservation methods right up front. And like its predecessor Wise Sons, there’s the familiar menu of Jewish deli favorites like pastrami, matzoh ball soup and chopped liver. But with carefully sourced ingredients and smoked-in-house meats, these latter-day nosheterias are courting a different kind of customer base, younger and more food-savvy

• Contemporary Korean – For the dining-out mainstream, traditional ethnic Korean food has always been a bit more challenging than Thai and Vietnamese—maybe it’s the funk of gochujang (the ubiquitous fermented soybean condiment) and the clinging smoke of tabletop barbecue. But thanks to Korean-American chefs like David (Momofuku) Chang and Roy (Kogi) Choi, traditional products like kimchi and mashups like Korean tacos have opened the field. Two restaurants in New York City (Danji and Hanjan) exemplify what this tantalizing cuisine can become when its trademark flavors and cooking styles are married to Westernized amenities like craft cocktails and warm hospitality

Photo Credit: CC by Mr. T in DC "Merzi Rice Bowl with Shrimp"
Photo Credit: CC by Mr. T in DC “Merzi Rice Bowl with Shrimp”

• Street Food from the Subcontinent – Trend trackers have been talking up the rebirth of Indian food for a while now, with upscale restaurants like Dosa in San Francisco and Clay Pit in Austin. But it’s the snacks and tiffin meals—the Indian equivalent of fast food—that still seem primed for crossing over to the mainstream, thanks to the growing popularity of other kinds of ethnic street food. Chutneys has two locations in the Boston area dispensing paratha wraps and “nanini” sandwiches. Merzi, in Washington, DC, specializes in “tandisserie” chicken in a mix-and-match sandwich, bowl or salad format. And Kasa gives San Franciscans the burrito-like kati roll in a hip, modern taqueria-style environment


What’s the Deal with “Daily Deals”?

Ever since the restaurant industry started couponing, the practice has been a source of controversy: Are coupons and other deals a useful source of sales, or do they devalue brands and train consumers to expect a discount?

The recent recession and subsequent easing of the economy seems only to have rendered the practice more disputed—often in the form of social couponing, a.k.a. daily deals—and the troubles of sites like Groupon (which exploded on the scene in November 2008) have added to the confusion.

By 2011, the daily deal bubble was huge. Almost from the start, however, operator experiences were mixed. Proponents viewed these deals-of-the-day as a means of encouraging trial and bringing in new customers; in the best scenario, deal-users came in and ended up adding on sales in the form of high-margin items like drinks and desserts, and found a new favorite place to spend their discretionary dollars.

Opponents complained that the practice only brought out the penny-pinchers, who selected a restaurant based on the best deal, rarely spent more than the deal was good for (often stiffing the server in the process), and never came back again. Many early adopters on the operator side were overwhelmed by business from coupon holders, and loyal regulars could get lost in the fray.

Brands were quick to embrace the trend by ramping up their own discounting efforts, particularly with respect to new products and LTOs, and have showed continued reliance on couponing, even as independents began dismissing it. Companies like Burger King and Subway are far less reliant on outside sites for getting coupons into the hands of perspective customers, of course, in the form of website-based specials, mobile apps and more—as detailed in this poll by the National Restaurant Association and LivingSocial on the subject of online restaurant marketing. But coupons and deals still have to be carefully managed, as KFC famously discovered several years ago when Oprah talked up one of the company’s giveaways.

In the meantime, Groupon wobbled on, as consumers in a recovering economy became less interested in deals, and larger, more familiar companies like Google and Amazon began offering their own. Now it seems as if Groupon is pivoting away from reliance on down-and-dirty prepaid deal vouchers and focusing attention on a service called Groupon Reserve, which allows customers to book tables at high-end restaurants in 10 test cities, and receive a discount of 20-40%.

But social deals do still get diners out of their homes and offices and into restaurants, according to a recent study from AYTM Market Research, even though the pace is slowing somewhat. As reported by eMarketer, 38.2% of U.S. internet users subscribed to at least one daily deal in March 2013, down from 45.3% in September 2011.

Several smaller companies still consider services like Groupon to be a valuable tool, particularly when it’s part of a larger arsenal, as evidenced by the experience of companies like NYC Bagel, in Chicago.

The same is true now as it was in the very beginning of the social coupon revolution. Daily deals carry great potential advantages for hospitality operators, but a poorly structured deal could turn into a nightmare of lost revenue and unhappy customers. The National Restaurant Association offers some best practices in this post prepared with the assistance of none other than… Groupon.


Tip of the Month

Agricultural Marketing boards can be a great source of information for operators, including menu and consumer trends, recipes and, yes, marketing materials for promotions and more. Some good ones include:

Alaska Seafood Marketing Institute
American Egg Board
California Avocado Commission
Cattlemen’s Beef Promotion and Research Board
Idaho Potato Commission
Wisconsin Milk Marketing Board

For more information, check the USDA website, including this link.