McD hungry to upscale image, expands test of fast-casual Bistro Gourmet units
McDonald's is going gourmet, and retrofitted restaurants representing the chain's foray into the fast-casual market — with a modular concept called Bistro Gourmet — are operating from Florida to New Jersey and serving up such items as grilled panini sandwiches, espressos and premium ice cream.
March 28, 2004
MARLTON, N.J. (March 29)- McDonald's is going gourmet, and retrofitted restaurants representing the chain's foray into the fast-casual market — with a modular concept called Bistro Gourmet — are operating from Florida to New Jersey and serving up such items as grilled panini sandwiches, espressos and premium ice cream. The McDonald's Bistro Gourmet units currently total 12, but at least four more are expected to debut shortly. Ten of the stores are in Florida — nine in Orlando and one that opened this January in Tampa. One unit doing business here in Marlton also opened in January, and at least two more are planned for New Jersey by year-end. Another branch already is operating in Glasgow, Del. The Bistro Gourmet format is set to arrive in Devon, Pa., and Cape May Court House, N.J., according to a McDonald's general manager for the company's Philadelphia region. Currently, franchisees operate all Bistro Gourmets. McDonald's corporate officials said Bistro Gourmet is one of many menu and concept tests that the company always has encouraged, like the company's other fast-casual concept, McCafe. That was imported from Europe and operates as a separate adjunct to some 500 McDonald's units internationally, serving deli-style sandwiches and high-end coffee. McCafes now are in U.S. test markets, including Raleigh, N.C., and San Francisco. A Cajun-theme restaurant in New Orleans, Chef Mac's, which opened last September, is another example of a McDonald's test concept with unique menu items and decor. Bill Whitman, a spokesman at McDonald's Oak Brook, Ill., headquarters, said the Bistro Gourmet test is making its way into different markets through eager franchisees. "It is managed by folks locally," he said. "There are a number of unique McDonald's around the country, all an effort to look at new menu options and new ways to keep customers interested." Whitman said McDonald's would evaluate the results of the Bistro Gourmet units and monitor customer feedback, but the company's main priority still remains its fast-food operations. "The focus is on the core menu and making sure we're satisfying customers who come in for Big Macs and French fries," he said. "Additions to the menu are, honestly, icing on the cake." One franchisee and the suppliers to his Bistro Gourmet operation said McDonald's corporate officials are very interested in pursuing the Bistro Gourmet concept and are watching it closely. "I was approached [by corporate officials] about this concept," Mark Heinz, the owner and operator of the Bistro Gourmet unit in Marlton, N.J., said. "It's part of McDonald's reimaging; we want people to know we're more than just fast food." Indeed, the Marlton unit, with granite counter tops, classical music and "tall mocha lattes," looks more like a Starbucks than a McDonald's. Two of the restaurant's suppliers — Bucks County Nut and Coffee Co. in Langhorne, Pa., and Hershey's Creamery Co. of Harrisburg, Pa., see potential in the Bistro Gourmet concept, too. Rodger R. Owen, founder and chief executive officer of Bucks County Nut and Coffee, said McDonald's officials had approached his company to arrange a partnership in the new concept. The supplier now provides its products to Bistro Gourmets in the Northeast region and holds a contract with McDonald's that allows it to sell to McDonald's nationwide. Owen said his company most likely would remain a supplier in the Northeast, however, where its brand recognition is the strongest. The Marlton store's average check has increased from about $4.60 to nearly $8 since the introduction of the Bistro Gourmet concept's newer items, Heinz said. Bucks County-brand coffee ranges from $1.25 for a "tall" and $1.40 for a "grande," and made-to-order grilled panini sandwiches are $5.50, or $7 with a small fries or side salad. For February — the Marlton outlet's first full month of operations as a McDonald's Bistro Gourmet — sales increased 20.8 percent, Heinz said. Bistro Gourmet specialty items accounted for 7 percent of total sales. "I am feeling very, very positive," Heinz said. "The sales we are doing are ahead of what [branches in] Florida did." The Bistro Gourmet concept originated in Florida almost three years ago, when a franchisee group, Oerther Foods Inc., opened larger McDonald's units with various themes and high-end menu items in and around Orlando. Heinz said a Bistro Gourmet unit that opened two years ago in Florida generated 15 percent of its sales from bistro items last month. At the request of David Murphy, McDonald's vice president and general manager for the Philadelphia region, Heinz and other franchisees toured the Florida units about a year ago, Heinz said. His New Jersey McDonald's is the first restaurant outside a tourist center to operate as a Bistro Gourmet. "We hope to learn what kind of concepts work," Murphy said. "Orlando is very touristy, and you think you can do almost anything down there. We brought it back here where Marlton is not a tourist community, but both areas are doing very well. We're in the learning stage right now, like 'How does it integrate into our operations, how do customers like it, does it drive sales?' " Heinz said there is no question that the concept can drive sales, especially among customers who typically wouldn't think of visiting a McDonald's. "We are now getting people back who we lost," he said. "We see people who haven't been in here for years; we see die-hard Panera Bread fans in here — Friendly's customers and people who go to Starbucks." Of the Bistro Gourmet items, Heinz said, a grilled-chicken panini, which uses the same chicken as McDonald's grilled-chicken sandwiches and salads but is baked and flavored differently, is the best seller, followed by a grilled-vegetable panini and a chicken burrito. Ice-cream sales follow the sandwiches in volume, with coffee sales rounding out the bottom, Heinz said. The typical wait-time for bistro items is about 4.5 minutes, Heinz said. Customers get pagers and are alerted when orders are ready for pickup. Food is served on white china at the counter. The pagers are exactly what many casual-dining restaurants use to alert customers that their table is ready. Patrons at the Marlton unit can order both McDonald's usual food and bistro items at the counter or drive-thru and have the choice whether to be served everything at once or receive the McDonald's food first. "Many mothers want their children's Happy Meals right away," he said. "And then they wait for their coffee." Heinz said his restaurant took in $3.4 million in total sales last year, and he spent about $250,000 on the necessary equipment to operate as a Bistro Gourmet. McDonald's contributed money toward the renovations, Heinz added, declining to specify the amount. According to Heinz, McDonald's restaurants that produce sales in the $2 million range and provide a more upscale decor most likely will be considered by the franchisor for Bistro Gourmet conversion. "This is not for every restaurant," he said. "It does complicate things; it is harder for us." Heinz's Marlton restaurant hired a sous chef, Lisa Chang, who has worked with McDonald's for 11 years. She is responsible for driving the Bistro Gourmet concept at his location, he said. Other staff members who were trained to prepare the bistro items now work solely on that segment of the operation, Heinz said. The Bistro Gourmet specialists are identified by their blue chef jackets — something never before seen at a McDonald's. Both Heinz and Murphy are cautiously optimistic about the concept but said sales have exceeded expectations. If sales of McDonald's standard menu items suffer at the hands of the bistro items, the concept would be pulled back, they said. "We're building both brands," Heinz said, predicting that "the McDonald's side is not going to suffer."
