In the News

Darren Tristano, executive vice president of Technomic, believes breakfast is still the most underpenetrated daypart. "There's an opportunity to draw in more customers with more ethnic selections, healthy offerings, like oatmeal, yogurt and fruit, and higher quality, more innovative grab-and-go items," he says.

"The price wars are very real and will intensify in 2010," said Ron Paul, president of Chicago-based restaurant consulting firm Technomic.

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"Expect to see a fresh, premium or high-quality spin on familiar, humble foods, such as artisan cheeses used in macaroni and cheese," the firm said in its forecast of 2010 food trends.

Interest in premium burgers and artisan sandwiches, for example, ramped up in early 2009. Technomic said restaurants will continue to place an "even greater emphasis" on providing diners with hearty, custom burgers and sandwiches at value prices.

Sales at full-service restaurants (counting only food and nonalcoholic beverages) are down an estimated 8 percent this year over last, according to Technomic, a Chicago-based food industry research and consulting firm. Though there are signs of improvement -- sales were down 6.3 percent in September versus 12 percent in August -- Technomic says restaurants are experiencing "perhaps the worst market conditions the restaurant industry has seen in nearly 20 years."

Rocky Top is among the few restaurant groups opening new restaurants now, said Bob Goldin, executive vice president for Chicago firm Technomic, which tracks the restaurant industry. Technomic estimates that more than 15,000 restaurants will have closed in 2009, accounting for more than 2 percent of the overall industry.

The foodservice consulting firm Technomic has projected that U.S. restaurants and bars will finish 2009 at just over $328 billion in sales, which would be a 3.5 percent drop from last year. The firm estimates that sales will decline by another 0.8 percent in 2010.

"You're definitely going to see a lot more discounting," said Ron Paul, president of Chicago-based Technomic. "That's about the only weapon that restaurants have right now to bring in traffic."

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Paul said restaurant chains in the coming year will continue to counter dropping sales by cutting their operating costs so they can maintain profits with lower foot traffic. Some chains not closing restaurants could sell some off to franchisees to reduce management costs, as Brinker International recently did with some of its Chili's restaurants.

Credit will remain tight, Paul said, limiting expansion opportunities for locally owned restaurants and corporate franchisees. Banks will continue to renegotiate loan terms with some struggling chains, and shopping center landlords will be working out leasing deals to prevent some locations from closing.

"It's been an abysmal year for the restaurant industry," says Melissa Wilson, principal at the research firm Technomic.

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"The sheer number of restaurants now with a presence in the catering space is amazing," Wilson says. Catering is a $33 billion opportunity for the industry, she says. People may be eating out less often, Wilson says, "but there's certainly no embarrassment about bringing a restaurant platter to a potluck dinner."

The latest downturn hit high-earners and big-spending companies unusually hard, noted David Henkes of restaurant consultancy Technomic. Before the current "top-down" crisis unfolded, he observed, "Fine dining was not viewed as vulnerable to recession."

Ron Paul, president of Technomic Inc., a restaurant consulting firm, said sky-high unemployment finally caught up with McDonald's, which was the leader in fast-food breakfasts. If people don't have a job, they won't stop at the Golden Arches for a pre-work meal, Paul said.

A new survey by market research firm Technomic shows that 88 percent of consumers plan to eat their holiday meal at home, or at a relative's house.

Ron Paul, president and chief executive of Chicago-based research firm Technomic Inc., said selling discounted breakfast items should drive traffic in a day-part that has slowed down considerably and should build sales by driving purchases of other higher-margin items.

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"McDonald's has always kind of owned breakfast, and this is an attempt to hang on to it and get their competitors where they're vulnerable," Paul said. "It shows that they still want to be successful in coffee. They've got to make their franchisees happy--it cost a lot to get McCafe into the stores, and they want the return on their coffee investment."

A recent study from Technomic Inc. found that consumers are more interested in buying premium coffee now than they were two years ago. According to the survey, 34 percent of respondents said they preferred buying premium coffees, compared with 29 percent who preferred premium coffee drinks in 2007.

In a report earlier this year Technomic Inc., the Chicago based research company, said, "Fast casual was once thought to have limited potential for continued growth, however, today this subsegment seems ideally positioned for the new economic and social climate. These restaurants give casual-dining consumers an opportunity to 'trade down' to lower-priced, yet high-quality, fresh food, and allow quick-service customers a way to 'trade up' to a 'third-place' environment that offers affordable food quickly at a cost that is usually only about $2 to $4 more than that of typical quickservice venues."

Breakfast has become a "hotbed of activity" as restaurants realize that consumers pulling back on spending still are willing to eat a meal out, research firm Technomic Inc. said in a recent study.

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Chicago-based Technomic found that consumers increasingly want breakfast foods for lunch and dinner, like Eat'n Park and other restaurants offer. "In this type of economy, people are seeking out more comfort foods like breakfast all day," the firm's Sara Monnette said.

"It's an impulse purchase that's not all it's cut out to be," said Ron Paul, president of Technomic Inc., a Chicago consumer research group.

"Supermarkets are trying to get part of the business," pointed out Darren Tristano, executive vice president for Chicago-based food service consulting firm Technomics [sic]. Grocery stores offered more roast chickens and stuffed peppers, while restaurants began promoting takeout options and even building special entrances and counters for takeout customers.

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Pickup windows have been tested by other chains, Mr. Tristano said. While it's not an entirely new idea, he said it seemed to be a good option for family-style restaurants.

Also helpful have been improvements in packaging in recent years, making it easier to send home different types of dishes, he said. "At least it doesn't leak out over the seat of your car when you're driving home."

"It's a tough economic situation out there, and the fast-food pie has shrunk," says Ron Paul, president of Technomic, a consulting firm. Because of high unemployment, he says, consumers are increasingly hitting grocery stores and "turning on their ovens again."

Chipotle, based in Colorado, is second only to Taco Bell among the largest fast-casual Mexican chains. It had sales of $1.3 billion last year, growing by 20.7 percent, according to research firm Technomic. It has more than 900 locations in 33 states, with more than 100 new stores planned next year.

"Their moderately priced, high-quality Italian food in a romantic upscale setting has provided them with a strong niche in which to expand and succeed," says Darren Tristano, executive vice-president at Chicago-based food-industry consultant Technomic Inc.

Darren Tristano, executive vice president at Technomic Inc., noted that being up even 1 percent in 2009 "is an indicator of doing something right," but wondered about the options for the chain to grow outside New Hampshire.

"Most growth today is in sports bars, and the boomers and even Generation X aren't spending their dollars," Tristano said. "If they were to grow one unit at a time that would make sense, but casual dining is finding it somewhat difficult to grow in this economy."

The limited-service hamburger segment grew by 4.1 percent to $64 billion in 2008, the latest available numbers from Chicago food industry research firm Technomic Inc. That's faster than the 3.2 percent growth of the limited-service restaurant segment in total.

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"If you are trading down, you are wading to something you are accustomed to," said Darren Tristano, an executive vice president at Technomic. "There has definitely been a demand by consumers and a resulting growth in what we are calling the better-burger category."

"There are big opportunities for trendy, well-known chefs or brands to open," said Darren Tristano, an executive vice president at food industry research firm Technomic Inc. in Chicago. "But a lot of success will depend on whether they can continue to be relevant to the customer."

"I think companies, even the ones that are doing well, think it's inappropriate to splurge in this environment where unemployment is growing. It sends the wrong message," said restaurant consultant Bob Goldin, executive vice president of Technomic, a Chicago-based restaurant consulting firm. "Even our own company went from Gibson's, a high-end steakhouse, to Maggiano's (a moderately priced Italian restaurant chain).

"The six weeks leading up to and including New Year's is the difference between profit and loss for food establishments, so they're discounting and dealing. It's make-or-break time."

Chicago market research firm Technomic recently asked mothers of children aged six to 12 how their families' eating behavior had changed at different restaurant types during the 12 months through July 2009. More than half of respondents (51 percent) reported that their families cut back on visits to or spending at fast casual restaurants. And the numbers are even worse at family style (52 percent cutback), casual dining (55 percent cutback) and fast food (59 percent cutback) restaurants.

All-day breakfast service is a growing market in North America, said Darren Tristano, executive vice president of Technomic Inc., a Chicago-based industry consultancy. A recent survey by the company shows that 36 percent of consumers will order breakfast items throughout the day if a restaurant makes them available.

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"The convenience factor of quick-service and delivery is definitely going to give them (Eggfast) a leg up," Tristano said.

Technomic notes greater reluctance on the part of consumers to shell out for pricey fresh produce and organics.

This year, North American consumers are expected to spend 48% of their food budget on meals eaten away from home, down from 50% in 2008, according to Technomic, a food-industry consultancy in Chicago.

"All the research we've done shows that business is really soft in bars and restaurants," said David Henkes, vice president with Technomic, a Chicago-based restaurant-industry consulting group.

It's hard to quantify the busiest nights at bars, Henkes said. But he suspects the night before Thanksgiving is a big one nationwide. After all, he said, not everyone is a sports fan. "I would certainly put it as one of the top five bar nights of the year," he said.

Technomic, a leading research and consulting firm for the restaurant industry, says takeout food has been growing about twice as fast as the overall restaurant industry.

"His experience with the franchise model is probably the main reason why Potbelly brought him in," says Darren Tristano, an executive vice-president at Chicago-based food industry consultancy Technomic Inc. "This definitely will be a shift in their culture."

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In addition to franchises, Potbelly plans more company stores, says Rick Trebilcock, senior vice-president of marketing. He declines to provide specific targets, but Mr. Tristano notes that Potbelly has opened about 40 restaurants annually in recent years. He estimates that each Potbelly store does about $1.1 million in sales annually, and says the chain could add 30 or 40 franchise stores a year. Potbelly won't disclose total revenue, but Mr. Tristano's per-store estimate points to roughly $245 million in annual sales.

Darren Tristano, executive vice president of Technomic Inc., a Chicago-based food industry consulting group, said McDonald's franchise owners have wide discretion in how they decorate their restaurants as long as brand elements like the golden arches are present.

"There is a lot of flexibility," he said.

When Del Monte Foods appointed Bill Pearce as its first CMO in May 2008, the goal was to deliver category-changing marketing that would drive the organization forward, the company said at the time.

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Bill Pearce: “When you look at the Technomic [restaurant and food industry research firm] data, which tracks the number of meals at home [and out-of-home], the at-home meal occasion is just as relevant as it was 12 months ago. One of the biggest impacts of the recession is families spending more time together and wanting more quality time [often via a meal] together.”

Total industry alcohol sales are projected to fall 2.5 percent in 2010, with fine dining taking the hardest hit as sales in the segment tumble 10.4 percent, according to Chicago-based Technomic Inc. Alcohol sales are forecast to drop 6.8 percent in the casual-dining segment, 6.1 percent in lodging, 5.0 percent in casinos and 2.0 percent in concessions circles. Technomic research shows that only the bars and nightclubs category, including sports bars and neighborhood taverns, is expected to enjoy a slight uptick in 2010, with growth of 0.6 percent in nominal terms, or before adjustments for inflation.

They've always been really customer-centric," said Darren Tristano, executive vice president of Technomic, a Chicago-based restaurant consulting firm. "They try to provide high-quality service to match the quality of the food, and I have to say, the reviews they get are fantastic."

The result, Tristano said, is Chick-fil-A's growth. He predicts sales across the industry to be flat or down for this year.

While the cafeteria and buffet segment has faced slumping sales for years, Furr's sales are trending up, according to Technomic, a Chicago restaurant research firm.

Even among the relatively healthy fast-casual restaurant segment, Mexican concepts grew better than most, with 11.9 percent expansion last year, according to food service consultant Technomic.

Donatos, with $177 million in sales last year, is the country's 13th-largest pizza chain, said Darren Tristano, a spokesman for Technomic Inc. Pizza Hut, the leader, had $5.3 billion in sales last year.

"I think the whole bakery cafe been a successful niche," said restaurant consultant Bob Goldin of Technomic. "Corner Bakery is an established company that's performing well and has a winning formula for success in other markets. There's room for more than Panera."

Data released in the recent 2009 Technomic Future of Fried Foods study has estimated that approximately seventy-five percent of leading chain operators have switched or are in the process of switching to trans fat-free cooking oils.

New software would update the complicated abbreviations of the touch-screen register with simply labeled, icon-like pictures of food. The system is easy to learn and may cut as many as 10 seconds off workflow, said Laurie Gilbert, the center's director.

That saved time may squeeze another five cars in the drive-through lane per hour, said Darren Tristano, executive vice president at Technomic.

McDonald’ currently aims to serve most customers within 90 seconds of taking their order.

A recent study by Technomic Inc. found that 50 percent of consumers said receiving products in green packaging made from biodegradable or recycled material is important to them when choosing a restaurant.

''You ask people in surveys why they chose one casual dining chain over the other and they'll say, 'because the line was shorter,' '' says Ron Paul, the president of Technomic.

Americans are cutting back most on dinner at restaurants, down 6.8% compared to the prior year, and least on lunch out, down 5.3%, according to Technomic.

In a recent poll, 85 percent of respondents said that they eat desserts once a month or more, which is the same amount of times they consume hamburgers, and 0 percent said they never eat desserts, said Melissa Wilson, a principal of the Chicago-based market research firm during the recent Menu Trends & Directions conference held here.

"It sounds to me like they're looking for some fresh perspective and insights from the marketplace and not the just from the coffee and doughnut space," said Technomic's Darren Tristano. "After awhile, getting a fresh perspective on a pretty old brand can't hurt."

"This environment has created a very high level of competition, and real winners are the ones who can partner with the restaurants and add value for them," says Darren Tristano, an executive vice-president at Chicago-based food industry consultancy Technomic Inc. "Selling restaurants on new opportunities is critical, and success depends on people like (Ms. Bird)."

After four years at the helm of McDonald's venerable marketing machine, Ms. Dillon has driven share gains and international expansion, and continued to grow the business as the rest of the fast-food industry has slowed and declined.

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According to Technomic, McDonald's share of the burger category has grown from 43.6% to 46.8% since 2003.

According to Technomic, McDonald's share of the burger category has grown from 43.6% to 46.8% since 2003. In measured-media terms, McDonald's spent $814 million in 2009.

Technomic recently reported that in the past three years 21,425 units have dosed in the United States, and 84 percent of those were full-service operations. That reflects the worst three-year contraction in foodservice history.

"Conspicuous consumption is out," said Technomic's Kevin Higar. "It's chic to be cheap."

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Today's consumers take pride in being frugal, he added, so restaurant operators need to respond with promotions that ensure they feel they're getting their money's worth.

Some 70% of respondents to a recent Technomic Inc. survey said healthier foods are increasingly difficult to afford.

"People are attempting to economize, especially away from home," says Bob Goldin, executive vice president at Technomic. "Value is what counts to consumers right now and unfortunately, in the minds of many consumers, a lot of these lower-priced options are just not as healthy but they're still buying them."

Besides battling the economy, Max & Erma's also has faced strong competition from other casual-dining chains, such as Applebee's and Chili's Bar and Grill, said Ron Paul, president of Technomic, a Chicago restaurant and food research firm.

"They've been struggling for quite a bit," he said. "That whole category of bar-and-grill casual restaurants have all become kind of look-alike, and not offering consumers anything to differentiate themselves. With Max & Erma's being the smaller player, they didn't have the marketing muscle the others have.

Dunkin' Donuts has a 72 percent share of the donut market compared to 8 percent for Krispy Kreme and 5 percent for Tim Hortons, according to food industry consultants Technomic, Chicago.

"Tim Hortons faces a big challenge from the established players in a more competitive market, particularly from brands like Dunkin' Donuts in the East," said Technomic president Ron Paul. "Tim Hortons' brand image is somewhat limited here and it's not like everyone's been to Canada and knows them as a well-established brand."

According to Technomic Inc., the Chicago-based foodservice research and consulting firm, ready-to-eat or ready-to-heat prepared foods in supermarkets generated about $14.7 billion in sales in 2008. Between 2006 and 2008 supermarket sales of those items rose 7 percent to 8 percent annually, Technomic said.

"It's just a modest development, not really that significant," said Ron Paul, president of Technomic Inc. "As a restaurateur I wouldn't give it a second thought."

Though bar-cafes such as the Map Room and Katarina's have championed the idea for years, Chicago seems to be further catching on to a trend seen in Europe and even the East Coast, said Darren Tristano, executive vice president of Technomic Information Services, a food service consultant based in Chicago.

While people drink coffee throughout the day, they mainly buy it in the morning and afternoon, Tristano said.

"When you think of a cafe in the U.S., you think breakfast. In Europe, when you think cafe, it's a place to have coffee and have a drink," he said. Offering alcohol on menus and shifting more to a wine bar at night can help generate sales revenue, he said.

Restaurant analysts at Technomic Inc. say sales at premium burger concepts such as Smashburger -- which touts fresh ground beef, gourmet bread and other trendy attractions -- was the prime driver behind the 4.4 percent sales growth in all U.S. burger restaurants last year.

Smashburger led the Top 50 U.S. burger chains in growth, with revenues up more than 150 percent over 2007.

That downturn has been brutal on restaurants as the industry is expected to see its second consecutive year of sales declines in 2010 -- the first time that's happened since Technomic Inc., a leading market research company, has tracked the food industry. If Technomic's projections for 2010 hold true, the 2008-2010 period will mark the weakest period in food-service history.

"It began about 10 years ago with sliders," said Darren Tristano, author of a new burger study for restaurant industry think tank Technomic Inc.

He decided this was no fad when he saw the Ritz-Carlton serving White Castle/Krystal-style miniburgers hand-pressed from filet mignon in 2002.

Jaw-dropping food specials drive traffic into restaurants and bars, especially during off-peak periods like happy hours, said Darren Tristano, executive vice president of Technomic Information Services, a food service consultant based in Chicago. Even though customers can be lured to establishments by the word "free," they might end up still spending money, he said. "Because you're spending less getting food for free, you're willing to spend more on beverages."

"They've narrowed their message and gone after value; appealing food at appealing prices," said Ron Paul, president of Technomic, a food-service consulting firm in Chicago. "They're using television very effectively to communicate to customers that there's a real reason to go."

Tilted Kilt puts a new twist on the basic idea behind Hooters, but it's not a "copy-cat" concept, said Darren Tristano, executive vice president of Technomic, a Chicago-based restaurant research and consulting firm. The outfits, Celtic theme and menu are different, he said.

Tilted Kilt faces competition from Hooters and other sports bars, Tristano said. The chain will have to produce quality food to draw people back, he said.

Ron Paul, president of the food consultant company Technomic Inc., said he thinks the redesign shows just how determined Burger King is to compete with "fast casual" restaurant chains such as Chipotle, Starbucks and Panera, which customers think of as a cut above typical fast food.

"People in the fast-food category are recognizing they've been losing customers to the fast-casual player," he said. "What this sounds like is an attempt to get that dining-in business back by making it an attractive environment."

The new buzzword when it comes to attracting restaurant diners is flat-out, ungarnished "save." It's a subtle shift from getting your money's worth to actually saving money, said Tom Miner of Technomic Inc., a restaurant research firm in Chicago, who spoke to food service professionals at a recent Foodservice News forum.

Version 6.0 enables customers to approve pricing, rebates and promotions via mobile devices including Blackberry[R] and iPhone(TM). This enables sales, marketing and finance to approve deals from their mobile device while on the road, without logging into the application, reducing the time required to approve deals and facilitating greater customer responsiveness.

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Gary Karp, Executive Vice President at Technomic, commented, "This latest version of FORGE(SM) promises more efficient workloads for sales, deduction processing and others involved in trade processes. Greater efficiency is necessary at a time like this in order to handle the increased volume of discounts manufacturers are evaluating and processing given the economic environment. Customer responsiveness is always important but becomes even more vital when customers are pitting manufacturers against one another, and the features in version 6.0 help manufacturers' front-line representatives quickly evaluate opportunities and respond to customers."

It will take more than just a buyout for Food Lion to increase its sales, said Bob Goldin, executive vice president of Technomic, a food industry consultant. It will have to invest in its stores and make a better connection with the customer, he said.

"You have to make it a more pleasurable shopping experience," Goldin said.

"They came out with pasta last year and had a nice bump in sales, but over time you wouldn't expect the trend to continue; you have to go on to the next best thing," said Darren Tristano, exec VP at restaurant consultant Technomic. "As they get into winding down on a growth standpoint from pasta, it's kind of put them in that position. And if you're looking for someone to blame, why not blame the advertising agency that you pay? It's an easy way to point the finger."

According to the latest data from Technomic Inc. and sponsored by the International Foodservice Manufacturers Association, sales at full-service restaurants, which include casual-dining and upscale-dining concepts, will continue to post the largest sales losses in years ahead. In 2009, full-service segment sales are expected to fall 8 percent on a nominal basis, which includes menu price inflation, and 10.2 percent on a real basis, which adjusts for inflation, to $165.7 billion. In 2010, full-service segment sales are expected to drop 4.1 percent on a nominal basis and 5.5 percent when backing out menu-price inflation.

"Most successful pizza chains have staked out highly defined market positions that allow them to stand out from the pack," said Darren Tristano, Technomic executive vice president.

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Tristano said that big pizza players Pizza Hut, Domino's and Papa John's aren't standing put, either. Pizza Hut has moved toward more catering with its Tuscani Pastas line, Domino's is differentiating itself with Oven Toasted Subs and Pasta Bread Bowls, and Papa John's continues to market its "Better ingredients, better pizza" positioning.

Still, Tristano noted, the big three's biggest opportunity for unit growth will be outside the United States. "When you hit the level of maturity that those brands have, you have to look to other ways of growing," he said. "As a result, they've been growing much more internationally, playing in a global market instead of just the U.S. market."

"Convenience is a No. 1 driver in many eating occasions," says Ron Paul, president of Chicago-based Technomic, a foodservice research and consulting firm. And when the economy improves, consumers will only expect their experiences to improve along with it, he says.

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Today "less-tolerant" consumers expect "to be greeted properly," says Paul, noting that it's not OK, for example, when guests are told to wait for a receptionist who chats on the phone or clears a table. Diners don't what [sic] their time wasted.

"So service has got to be better or you will lose them," Paul says. "We want to be seated promptly and get someone to the table soon. We don't want the salad dressing on the side after we finish the salad. We want everything now."

"You can even get Jay Leno an hour earlier now," he says, noting that television viewers no longer have to wait until 11 p.m. to see the comedian. That's the "impatient" culture we live in, Paul adds.