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January 2006
SPECIAL REPORT:
Perspectives 2006
By The Editors
The dawn
of a new year. A time of tea leaves and crystal balls,
opportunities and challenges. For those charged with
building the nation’s chain restaurants, it’s also a time of
questions. Will materials prices continue to climb? What
energy challenges lie ahead? And what about site costs?
To explore
answers to these and other questions, we consulted with equipment
spec/buyers from some top multiunit companies. In the pages that
follow, their thoughts on how they’re preparing for the challenges
of 2006.—Ed
Chick-fil-A: Build The Right Box
Amos Rice,
Senior Buyer
Chick-fil-A, Atlanta
Existing Units: 1,233
2006 New-Unit Projection: 77
One of the
biggest challenges you face in an uncertain future is building the
perfect beast. For most, that means coming up with the right
combination of menu, price, experience and location. First and
foremost for Amos Rice, senior buyer for Chick-fil-A, it means
building the right box.
“Designing the
right size store to meet budget, and offer the operator the
flexibility to grow and serve customers, is our big challenge,” he
says. “To get the right size of the kitchen, the dining room and the
parking lot, we’re always tweaking and have to move things around.
It’s a matter of logistics, but we also want to end up providing
operational excellence, giving operators the right tools to do the
job.”
The problem is
getting a large enough lot, Rice says, something all of the pros
interviewed here noted is difficult. Prime real estate is getting
harder to find. It’s also increasingly expensive, especially in
California, where Chick-fil-A is expanding. To address some of these
concerns, the company is developing a new prototype store this year.
The company’s
growth strategy has always been conservative. Expansion has always
been funded by sales, not borrowed money, and tempered by the
homespun principle of not getting bigger without getting better. So,
along with the box, Chick-fil-A is looking hard for the next big
thing on its menu.
“We’ll look at
different menu items this year,” Rice says. “We want to hit a home
run with something that’s not on the menu now that will help us
grow. We want to create a raving fan to help get the word out about
us, and generate what we call ‘secondmouth’ service—repeat
business.”
In terms of
equipment, a big challenge will be meeting food codes that require
cold storage temps of 41°F or lower. That means finding new
refrigeration that meets new NSF specs. Rice also would like to find
a blast chiller the right size to work for the chain’s products
without having to resort to a custom-engineered solution.—MS
Bob Evans Hold A Steady Course
John Curry,
Senior V.P. Development
Bob Evans Farms, Columbus, Ohio
Existing Units: 583 Bob Evans, 8 Owens, 96 Mimi's Cafes
2006 New-Unit Projection: 15 plus four remodels
Battered by
inflationary pressures on both the operations and the development
sides of the business, a lot of operators are hoping just to stay on
course.
“I think a lot of
our competition is doing the same thing we are,” says John Curry,
senior v.p. of development at Bob Evans Farms. “We’re shoring up
what we have, and putting less emphasis on development and more on
core operations, from menu to service.”
The rising costs
of both materials and construction itself are affecting new-store
development in a big way. “Construction equipment uses a lot of
fuel,” Curry says, “and we’re seeing the cost of steel, lumber, PVC
pipe, asphalt and concrete all going up. I think it’s all
short-term—probably a year to a year-and-a-half—but it’s hard on
current development plans. We’ve bought property that we can’t build
on.”
Another challenge
is the dearth of virgin building sites, Curry says. Companies are
facing difficult environmental issues in re-developing sites, and
with them higher impact fees and engineering challenges. That’s led
to more remodels of another concept’s restaurant.
As interest rates
go up, Curry says, the housing market will likely slow down, which
could end up easing demand on materials and builders, and in turn
help the industry. But he, like many others, uses a sharp pencil to
figure out ROI on potential sites before breaking out a shovel.
Cost pressures
are making chains like Bob Evans more cautious about equipment
purchases, too. “We’re looking three to five years out and asking
how the current equipment package meets anticipated needs,” Curry
says. “Consumers are smarter than ever. We ask them what they expect
from the brand. We have to evolve, figure out where the menu’s
going. Then we have to ask, how is equipment going to contribute?”
Equipment has to
be versatile, he says, capable of cooking two or three menu items,
not one. It also has to be simple to operate. That means more
standard catalog items instead of specialized equipment.
“We don’t have a
bunch of chefs out there,” Curry says. “We need simple systems,
simple equipment.”—MS
Burger King: Do What You Do Well
Mark Finck,
Equipment Development Engineer
Burger King Corp., Miami
Existing Units: 15,508
2006 New-Unit Projection: 96 (US only)
The key to facing
whatever the future holds may be doing what you do best. After years
of being in flux under one owner or another, Burger King is on
track.
“We now have a
management team that has demonstrated real leadership,” says Mark
Finck, equipment development engineer. “We have a common goal and
vision now. Our emphasis is on acting like the global company we
are.”
New management
first looked inward and saw that while the company has a global
presence, each country was operating like an independent fiefdom.
With a common goal, the team realized that the best practices of
each could be incorporated into a better, more efficient whole.
Meanwhile, on the
equipment side, B.K. has had a new broiler in development for the
past two years. Last year field tests in more than 20 units were a
big success, Finck says, and this year the broilers will start
rolling out system wide.
“One of the
drivers is energy savings, ”Finck says, “and this new broiler could
have an enormous impact. It’s not only more efficient, it also runs
cooler than our current broiler, which will have a big effect on
HVAC costs. It’s also more versatile, so we may be able to expand
our menu into thick chicken items and burgers, or the fresh frozen
arena.”
The change hasn’t
been without controversy. It will cause a major change in
operations—notably, a switch from continuous to batch cooking. On
the upside, some broiler operations are simplified. A prototype
broiler developed four years ago was a puzzle to disassemble and
clean with 38 parts. The new one has just six parts to remove and
clean.
The broiler isn’t
the only equipment to go under the microscope. A fryer study yielded
an oil management program that will save $17 million this year. And
a look at ergonomics in the kitchen resulted in a new ROC (reduced
operating cost) design that helps combat rising costs of labor and
energy. The new building design also costs less to build, $800,000
vs. up to $2 million for old designs.
“We used to have
many different kitchen styles,” says Finck. “Now we have a common
kitchen layout and can build more seats or a drive-thru around it
depending on the lot. New construction this year will be a real
adventure.”—MS
ARAMARK Capitalize On New Technology
Rick Gentry,
Director Technical Services
ARAMARK Innovative Dining Solutions, Philadelphia
Existing Accounts: undisclosed
The year ahead
may look uncertain to some. To others, the future’s bright because
they’re basking in the glow of new and innovative technologies.
It’s safe to say
Rick Gentry falls in the latter camp. The director of technical
services for ARAMARK Innovative Dining Solutions says technology is
here to help us, and he plans to take advantage of whatever’s coming
out of the supplier camp.
Like, say, speed
cooking. "Accelerated cooking is ahead of where the microwave was
years ago,” he says. “Tastings we’ve done show it’s giving us what
we’re looking for—more productivity with less labor because it’s
programmable.
“RFID also is
going to find a niche,” he adds. "Maybe not this year, but soon.
There are lots of possible uses, but we don’t know how we’ll use it
yet. It’s a matter of working with companies to find applications,
like in our c-stores, where products are coming in and out quickly.
In that environment, RFID applications could be about security.”
ARAMARK
consolidated all of the Innovative Dining Solutions staff in one
facility last March. The new Innovation Center houses offices for
140 people and a test kitchen, and that’s where staff can see, touch
and work with new products.
“It’s up to us to
come up with innovative ideas that customers haven’t thought of,”
Gentry says, "innovations that find solutions for clients across the
country. Technology will help us give customers outstanding product
at the lowest price, and it’ll help us do it better, faster,
cheaper.”
The company’s
focus now is on providing existing customers with an increasing
array of services. Gentry doesn’t preclude opening new accounts, but
says “our world is about renovations.”
To keep up with
changing tastes and trends, Innovative Dining Solutions stays busy
in that regard. Rising equipment costs—double digits in some places,
Gentry says—are a concern that may force the company to look for
less expensive sources to provide similar value. In the meantime,
he’s having fun playing with new products in the IDS test
kitchen.—MS
Fazoli’s Adapt To Current Events
Vito
Vascassenno, Director of Equipment Services
Fazoli's Management, Lexington, Ky.
Existing Units: 400
2006 New-Unit Projection: undisclosed
Not many
operators can claim that current events have little or no impact on
their business. Ask anyone—a recession or a September 11th can have
a profound effect on sales. Last year, natural disasters made their
mark, affecting industries nationwide.
So it is that
chain operations are discovering that being adaptable and learning
how to change plans to suit market conditions are becoming
indispensable.
“Katrina and
current events have put everything into crisis mode in terms of gas
and construction materials,” says Vito Vascassenno, director of
equipment services at Fazoli’s. “Pricing and availability are
affected on a daily basis.
That’s had a
major impact on development plans. Adapting is key. “It will affect
our development strategy,” he says. “You have to look at how big
you’re building your building. Is it the same as what you built 10
years ago? Will its pro forma be the same? Our focus for the
upcoming future is to build sales, basically. We’re doing everything
we can to get people in our restaurants. Gas prices being what they
are, that’s a big hurdle to overcome.”
It’s not unusual
to see gas prices rise dramatically from one day to the next,
Vascassenno says. “It’s affecting every aspect of the restaurant
industry. People who used to not mind waiting in the drive-through
now are concerned about how much gas they’re burning.
“We have to look
at energy consumed by each piece of equipment and ask for the daily
cost of the top energy-consumers,” he adds. “It used to be gas
equipment was the way to go, but today it’s electricity. You have to
look at costs long-term. You have to be able to afford the
restaurant when it opens.
“A lot of
companies are going to be looking at ways to increase business
short-term, but long-term, they’re going to look at how equipment is
made, with what materials and how efficient it is.”—MS
Eat’n Park: Manage Costs Any Which Way But Loose
Andrew Dunmire,
V.P. Design & Construction
Eat'n Park Hospitality Group, Pittsburgh
Existing Units: 78
2006 New-Unit Projection: 3
Our top challenge
this year will be managing cost increases,” says Andrew Dunmire,
V.P. of Design and Construction for Eat’n Park Hospitality Group.
Whether they’re a
result of higher fuel prices, shortages of materials due to high
demand following a destructive hurricane season, or competition from
China, increased costs will confound the industry, he says. Keeping
them in line is more than a fulltime job.
Managing the
supply chain will be increasingly difficult, Dunmire says. “People
are keeping costs low by shaving inventory. Some manufacturers are
reluctant to charge for higher fuel costs, so they’re staying lean
in production. That makes product harder to get sometimes.”
Eat’n Park hopes
to alleviate part of the problem by purchasing more supplies
directly rather than through subs. “It takes more in-house
resources,” Dunmire says, “but we manage our own destiny that way.”
The supply chain
also has been affected by Katrina, Rita and Wilma, he says. Demand
among some suppliers has increased due to production capacity lost
by others to hurricane damage. That, along with contractor
inefficiencies, is slowing construction projects by 20%, Dunmire
says.
As costs rise,
the company is also looking at its prototypical model to see if
there are efficiencies to be gained. “Market conditions are causing
us to look at our building to see if we can get more out of it,”
says Dunmire. “That will slow development while we look.”
On the equipment
side, the company is taking more time to find and spec equipment
that’s reliable. “A lot of people are bringing to market new things
that have not yet proved reliable,” he says. “That puts the onus on
operators to test and find out if they work.”
In addition to
more pre-purchase testing, companies will likely try negotiating
better and longer-term warranties, Dunmire says. Another area where
Eat’n Park is pushing back is repair work. While some equipment
makers now want customers to contract with their local or regional
service reps, Eat’n Park is insisting on using current service
agents to do warranty work.—MS
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