Foodservice Equipment Reports
Chains Special Features

FER EXCLUSIVE: Perspectives 2014

In what has been perhaps the longest, slowest economic recovery since the years after the Great Depression, many foodservice companies have found ways not only to keep business on track and profitable, but also grow in the face of rising costs and money in short supply.

Operators we spoke with aren’t waiting around for the economy to get better. They’re looking inside their own operations for ways to squeeze more out of what they have, considering everything from more-efficient equipment to shrinking their footprint to save on construction costs. And while money’s still scarce, operators say it’s available for those who run a ship just as tight as the banker’s wallet. 

Our six interviewees tell us that knowing their customers has become more important than ever. Read on to find out how they plan to deliver a great customer experience even more efficiently in the year ahead.



THE EGG & I: Appeal To Younger Customers 

The old saw that breakfast is the most important meal of the day holds a lot of credence at E & I Holdings, Inc., Centennial, Colo. Since the company was formed in 2005 to buy The Egg & I restaurant concept from its founders Rayno and Patty Seaser, the chain has grown from 17 stores to 91 units in 19 states.

“We’ve experienced phenomenal growth,” says Tim Johnson, director of purchasing, “except for ’08 and ’09 when the brunt of the problems hit the economy—then we opened only three stores. Even while the economy is slow, our particular segment breakfast, brunch and lunch—is one of the fastest growing in the industry. Our customers are not doing power dinners anymore. Instead they’re doing power breakfasts.” In fact, every store has a conference room and Wi-Fi that customers can use for free. These features attract a lot of business from local companies and community organizations. 

Its menu and hours have made it a favorite among older Baby Boomers. “Our big opportunity is to get younger consumers in the door,” Johnson says. “We’re changing the décor and switching from classical music to hits from the ’60s, ’70s and ’80s. The challenge is to keep the concept vibrant without losing our older clientele.”

About 90% of business comes from breakfast items and 90% of those menu choices include an egg, so the concept’s key to success is the egg station’s productivity. 

Eggs used to be prepared on three 12-inch-wide sections of a flattop griddle, but one franchisee decided to put a fourth section in his store, and the chain recognized the benefit of having a 48-inch station. The stores’ kitchens also have a 72-inch seamless griddle for potatoes, bacon and sausage, and another 48-inch griddle for French toast, pancakes, sandwiches and meats.

“To get the extra foot back—especially in retrofits so it all fits under the hood—we pulled a sauce well from the line,” Johnson says. “We put it up front where employees finish dishes before they go out. Installing the larger egg station and moving the well really increased productivity.” 

At lunch, the chain used to serve several premade soups, but none were all that great, according to Johnson. So the company decided to offer only a few and make them from scratch. The company also is assessing larger coolers at the pickup station that will accommodate larger ingredient containers. These in turn will reduce the number of times ingredients need to be replenished, speeding production. The chain also is looking at more energy-efficient dishwashers and burners for its ranges, “but with gas prices so low, that’s not high on our priority list,” he says.

Also being investigated this year as part of its push for younger customers are POS equipment and tablet computers that could improve inventory control, order entry, food cost and general accounting functions. 

With all of that activity going on, E & I Holdings has a pretty full plate—with an egg on it, of course.



TED’S MONTANA GRILL: Stay The Course 

Ted’s Montana Grill, Atlanta, is that rare combination of traditional and modern that makes it one of a kind. Philanthropist, environmentalist and outdoorsman Ted Turner and restaurateur George McKerrow, Jr., founded the chain in 2002.

Since the first store opened in Columbus, Ohio, the company has grown to 44 units in 16 states, offering customers a unique twist on the traditional steakhouse in restaurants that strive to be as “green” as possible. By serving a wide range of bison steaks, burgers and other menu items, the chain has provided an incentive for ranchers to raise what were dwindling bison herds. 

The Great Recession caused the company to contract a bit in 2008 and 2009, but it’s broken through the worst of the economic downturn and come out even stronger.

“In the past, consumers turned to dining out because they could afford to spend on small discretionary purchases when they couldn’t buy big-ticket items like houses and cars,” McKerrow says. “During this latest downturn, they found everything in jeopardy—jobs, mortgages, car loans—so the only thing they could cut to make ends meet was entertainment and eating out.” 

Consumers spend about 5% of their income on entertainment and eating out, but with more people out of work and unable to dine out as frequently, only the best in class will thrive and grow, he adds.

Ted’s Montana Grill discovered its secret to scaling the economic mountain is to focus on fundamentals, including a conscious decision to avoid the “discounting trap” many chains use to keep traffic and share numbers up. To maintain exceptional service and encourage a great corporate attitude and culture, the chain emphasizes training, using leading-edge technologies to educate its young, technically savvy workforce. “We’ve also upped the ante in benefits, salary and incentives,” McKerrow says. 

The company has an aggressive goal of doubling its number of stores by 2021. As new stores are built, the chain constantly looks to incorporate the latest in green technologies and sustainable practices. Several units have achieved Leadership in Energy and Environmental Design certification, and all of the restaurants save water and energy by using low-flow valves and toilets as well as low-volt lighting.

“Cost of entry into a market is now our biggest challenge,” McKerrow says. “We have deals done for two restaurants next year and plans on the boards for three or four in 2015, but the costs of real estate and bricks and sticks are higher than ever. There’s increased pressure in the cost of commodities, labor, wages and, of course, the new healthcare law next year.” 

McKerrow doesn’t sound too worried, however, and his confidence is well-placed. After all, if Ted’s Montana Grill could help bring bison back from the edge of extinction, anything’s possible.



UNIVERSITY OF TEXAS: Finesse The Changes 

The Division of Housing and Food Service at The University of Texas at Austin has been on a tear for the past 13 years: The department has spent an average of $3 million-$3.5 million annually for renovations to foodservice facilities. 

“Our facilities were dated, equipment was worn out and sales were stagnant,” says Rene Rodriguez, director food service projects. “I was brought on board back then to be a project manager.”

In the process of renovating virtually every facility on campus, Rodriguez and his team looked at replacement equipment from all angles, evaluating each project on energy efficiency, environmental friendliness, sustainability, life-cycle costs and more.

They finished capital improvements last year with the fourth and final phase of a $12 million all-you-care-to-eat dining hall. The renovation included replacing the last of the university’s older flight-type dishmachines. 

“We could have kept it running for another four or five years,” Rodriguez says, “but we looked at whether it was worth it. Even though a new machine is as much as $150,000, switching from an old machine using 320 gallons of water per hour to one that uses less than 100 gallons per hour saves a lot of money in hot water.”

Now that all of the facilities are up to date, new projects are concentrating on fine-tuning efficiency and making the most of the changes. “The biggest impact on the bottom line comes from food cost and labor cost. Anywhere we can achieve labor efficiency or reduce waste, we’ll look at it,” he says. 

With so many facilities, including a food court that features 13 different concepts, the department prepares more food in its central commissary. Rodriguez just purchased a $40,000 deli slicer for the commissary to cut meats and cheeses for every facility on campus. One employee now can do the work of six staff members using regular slicers. He’s also replacing standard food processors with a large industrial unit to produce 40- to 60-lb. batches of hummus, a popular menu item.

Rodriguez and the department’s staff also spend a lot of time educating employees and students about how the new facilities contribute to sustainability. “What we’re tweaking now is people’s knowledge about what we’ve done and why,” he says. 

When Rodriguez started working at UTexas, for example, the foodservice department had only one chef. Now it boasts 13 culinary-school-trained chefs. They even have their own TV channel, a closed-circuit feed from one of the serveries that lets students in the dining rooms watch chefs talk about farm-to-plate sourcing and cooking techniques.



SPICY PICKLE: Dare To Be Different 

Although it might be considered small by chain standards with just nine units, Spicy Pickle already has found a way to more than double its size in the next few years, even in the current slow-growth economy. Spicy Pickle restaurants serve paninis, piadina (flat bread) and sub sandwiches, pizzas and salads with flavors from around the world. The chain uses high-end meats and Italian artisan breads and offers a choice of 10 different cheeses, 21 toppings and 15 proprietary spreads.

“While we continue to strengthen our presence here, our focus for growth is on the Middle East,” says Stephanie Flanders-Martin, v.p. of business services, Cibus Franchising LLC, Broomfield, Colo. “We have signed agreements for 12 units in Kuwait and Qatar.” 

The brand is taking calls from potential U.S. franchisees, but “funds are more readily available, and the specialty sandwich segment is less competitive in those markets,” she says.

That strategy in no way negates what franchisees are doing here, though. Sales in most stores are up between 12% and 15%, year over year, depending on the local economy. And the company is aggressively investigating ways to continue growing sales while cutting waste and costs. 

First and foremost, the chain focuses on differentiating its product from other sandwich chains, offering high-quality products and signature items unique to Spicy Pickle. However, the menu presented challenges when setting up Middle Eastern units; local dietary customs dictated various changes, including no pork products and use of Halal meats. The chain quickly ironed out the wrinkles and managed to source most food products locally. Equipment was readily available from Europe and China. 

Closer to home, the menu changes seasonally to accommodate specials, and items constantly are evaluated based on customer feedback and industry trends.

Cibus has been testing a TurboChef oven in one of its Spicy Pickle stores; if the oven continues to perform well, the chain plans to roll the appliance out to all of its stores next year. “The TurboChef would eliminate three other pieces of equipment,” Flanders-Martin says, “a pizza oven, another oven and the hood. So far, it’s improved product quality, helped speed service and saved on labor, but it also may mean big savings in upfront equipment costs, energy use and a smaller footprint for new units going forward.” 

The chain also is evaluating a new POS system that would provide greater flexibility in dealing with third-party providers, such as credit-card processors or mobile-app developers. “A benefit we’d get by partnering with this particular supplier,” Flanders-Martin says, “would be the ability to adapt to new technologies that could help us or our customers.” That might mean increasing online and cell-phone ordering and reaching out to customers with electronic promotions.



ABUELO’S: Shrink The Package 

Named by a major consumer-ratings magazine in its last three biennial surveys as America’s favorite Mexican restaurant, Abuelo’s doesn’t lack for fans. The 42-unit chain has been serving an eclectic combination of Tex-Mex and traditional Mexican fare as well as one-of-a-kind house specials since 1989. But in the nearly 25 years it has been operating, the chain has seen major shifts in business.

What has changed is the sheer volume of competition. “The longer-tenured stores and staff are less susceptible to large drops in sales when the economy turns down,” says Dickie Overstreet, v.p. properties, Food Concepts Int’l. Inc., Lubbock, Texas. But with increased competition, “We can’t count on sales volumes of $3 million or $4 million a year anymore. We’ve had a store in Arlington, Texas, for 15 years, for example, and it’s a great town to do business, but 3,000 or 4,000 seats [in other restaurants] have opened up in just the past three years.” 

To stay fresh and competitive, “we’re looking inside our walls to see how we can do things better in terms of operations, utilities, menu—anything we can do,” he says.

The chain constantly shakes up the menu with chef’s specials, drink discounts and promotions to create excitement and give repeat customers something new. Several units started making fresh tortillas in view of customers last year; the popular activity will roll out chain-wide in 2014, which means equipment needs will have to be assessed and modified for each restaurant. 

Because so many menu items are fried, the chain specifies high-efficiency fryers in all new builds and when replacing outdated fryers in existing units. Worn-out impinger ovens are being replaced with one that offers more capacity and flexibility with a split belt and greater efficiency in the same footprint. A new vent cowling on the oven also helps save HVAC energy.

This year, Abuelo’s is evaluating induction heat wells with temperature probes that could save on the chain’s water bills and offer longer life than traditional steam-table wells. New, efficient coolers also have been installed as older equipment reaches the end of its life cycle. 

“Our biggest challenge is construction costs,” Overstreet says. “We have to get it to a reasonable number so we can survive on lower traffic and smaller margins.”

To hit that number, the chain is shrinking the entire package. Stores are getting smaller, tables are spaced more tightly, ceiling heights are lower to reduce air movement and HVAC needs and a more-efficient kitchen-ventilation hood tempers makeup air and reduces HVAC loads while making kitchen staff comfortable. 

As with its menu, Abuelo’s isn’t afraid to try new things to see what works. If the magazine surveys are an indication, the chain is doing it right.



UNIVERSITY OF WISCONSIN: Saving Time 

To grow its foodservice business, University of Wisconsin-Madison opened three newly remodeled dining facilities in the past 16 months. And plans call for closing a fourth for remodeling in May 2014 and reopening in January 2015.

“We’re capturing more of the campus business due both to the remodeled facilities and a change in pricing structure a year ago. These changes are making us more customer-friendly to nonresident students, faculty and staff,” says Joie Schoonover, director of dining and culinary services as well as assistant director of university housing. 

All of the recent changes focus on saving everyone—from customers to kitchen employees and even management—time.

“We added marketplace dining to increase efficiency for the sake of customers, cutting the length of time they have to wait in line to purchase their meals,” Schoonover says. “Our last remodel [to open in 2015] will eliminate our last straight-line, stainless-steel serving line; we’ll only offer marketplace dining.” 

UW-Madison added a cook-chill area to one facility during its remodel and continues to add more product offerings from that area because production is so efficient. Schoonover’s staff now produces sous vide items in the cook-chill kitchen, which saves other kitchens time when finishing and serving.

The remodeling effort also included the addition of a cold-food production area where employees make the bulk of the grab-and-go items as well as sushi in all of the units, again saving time and labor. 

Employees need the additional time these days for customer service. “What was once a serving-line job now requires greater staff-customer interaction as we implement more action stations or customized-for-you venues,” Schoonover says. “Operationally, our challenge is finding qualified personalities and keeping positions filled as we raise the bar on customers’ expectations when they enter the new facilities. We also need continual training so employees can meet those higher expectations.”

Looking ahead, Schoonover says portability will be key to growth. “Students’ lifestyles are on the go 24/7, or nearly that. Many of our customers carry smart phones and would appreciate the ease of online ordering vs. coming into our facilities. We already offer carryout options in all facilities with both china and disposable serviceware available to customers.” 

“To accommodate them, we’re looking at a different online ordering system that will fully integrate with our POS system and new kitchen printers to expedite our takeout offerings.”

Nearly every decision the department makes now focuses on how to make tasks more efficient.

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