While 2011 marked another year of operational challenges for the restaurant industry, there is a renewed sense of optimism as fast casual operators head into 2012.
As we look back on the year and reflect on its impact on the industry, several stories and trends stand out among the rest. Here's a look at our top five successes and the one that didn’t quite live up to expectations.
1. Fast Casual heats up: This was the year of fast casual for casual-dining chains which have jumped to launch their own versions of the eateries. Red Robin, Famous Dave's, Gatti's Pizza, and others, each launched fast casual restaurants in 2011. Smashburger was named by Forbes as America's Most Promising Brand and a television show, America's Next Great Restaurant, was dedicated to the booming segment. Even quick-service restaurants have attempted to compete with their fast casual counterparts, upgrading interior designs and menus to reflect a higher quality experience for guests. In fact, visits to fast casual restaurants grew 17 percent throughout the last three years while the rest of the industry experienced its steepest traffic declines in decades. The increase and consumer demand for fast casual offerings exceeded the unit growth of leading fast casual chains, according to a study by foodservice market research firm The NPD Group. Look for more casual-dining chains to launch fast casual restaurants in 2012.
2. Social responsibility. It all started with Ron Shaich's launch of the Panera Cares Café in 2010. The Panera Bread Foundation continued to open its non-profit community café's in 2011 and now has a total of three in operation. The new stores do not tell customers what to pay for their meals. Rather, guests are asked to pay what they'd like to donate, whether it's the full suggested price, less or more. Howard Schultz, the CEO of Starbucks, also took a more involved role in the company's approach to community involvement. Schultz launched the Starbucks' Jobs Campaign in an effort to stimulate the economy. Starbucks also led an industry-wide initiative to help victims of Japan's tsunami and earthquake in March. Meanwhile, chains such as Corner Bakery Café, Raising Cane's and Rubio's partnered with Share our Strength to help end childhood hunger. Other industry organizations and companies, such as the National Restaurant Association and MonkeyMedia Software, also partnered with the organization to help further its goals.
3. International growth. Chains in the fast casual segment set their sights on international shores as concepts such as FreshBerry, Saladworks, OrangeLeaf, Wingstop and Panda Express signed franchise agreements for the Middle East, Singapore, Australia and Mexico. The increase of franchise agreements for international markets proves fast casual is not just a U.S. phenomenon. The expansion plans are a step in the right direction considering that for the past two years restaurant chains scaled back their expansion efforts in the United States, opting to wait out the recession. But toward the end of 2010 and throughout 2011, announcements were made almost weekly communicating franchise agreements destined to expand the dining footprint in countries across the globe. Other chains expanding to international markets include Jamba Juice, Buffalo Wild Wings, Charley’s Grilled Subs and Moe’s Southwest Grill.
4. Children's nutrition. The trend of offering healthier menus for children has been mentioned for several years in the National Restaurant Association's industry forecast. However, more chains in 2011 launched or expanded their children's menu. Freshii, EVOS and Fazoli's enhanced their offerings to younger diners while the NRA unveiled its Kids LiveWell healthy menu initiative in partnership with Healthy Dining. So far, 28 restaurant chains have signed up for the program, designed to offer healthier menu selections to children. Participants include Au Bon Pain, Corner Bakery Café, Boudin SF, Extreme Pita, Pizza Fusion, Redbrick Pizza and zpizza. The primary focus of the program is to encourage an increase in consumption of fruits and vegetables, lean proteins, grains and low-fat dairy, and to limit unhealthy fats, sugars and sodium.
5. Consumer health. The USDA has replaced its 19-year-old Food Pyramid with MyPlate. While no specific action was taken by fast casual operators, the USDA's new MyPlate guideline was unveiled in June by First Lady Michelle Obama and Agriculture Secretary Tom Vilsack. The guideline received favorable reactions from the National Restaurant Association, National Pork Board, USA Rice Federation, U.S. Dairy Industry and Produce Marketing Association. The USDA's MyPlate icon is designed to be a guide to help Americans make healthier food choices. The initiative promotes an increase in fruit and vegetable intake, and encourages a switch to whole grains and fat-free or low-fat milk, and a reduction in sodium intake and sugary drinks. One-quarter of the plate is devoted to protein intake, including lean meats, fish and poultry.
Americans were taken with America's Next Great Restaurant and its winner, Soul Daddy, but not enough to keep the 3-unit chain afloat. Upon winning as America's Next Great Restaurant in May, Soul Daddy opened locations in New York, Los Angeles and in Minnesota's Mall of America. Two of those locations closed in early June with the Minnesota location closing a few weeks later.
Soul Daddy was the brainchild of Detroit resident Jamawn (Jay) Woods. The restaurant’s original premise was soul food such as fried chicken and waffles; however, several menu changes were made to reflect a healthier offering of items.
While the show's four judges/investors, Bobby Flay, Curtis Stone, Lorena Garcia and Steve Ells, did not publicly reveal the level of their investments in Soul Daddy, each one was expected to contribute the same amount for a total of $880,000. In addition to Ells' contribution, Chipotle also plunked down $2.3 million in exchange for equity interest. The closures gave a momentary black eye to the restaurant industry and its judges. Here's hoping 2012 is a better year.
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