ICR XCHANGE – TAKEAWAYS / BRAND TAKEAWAYS
This year’s ICR Xchange was held in Orlando, FL. There were fewer restaurants presenting and fewer attendees than last year. Noticeably missing from the restaurant industry was Darden (Orlando is their home) and Burger King. Also, the overall atmosphere at this year’s Xchange was positive and upbeat, a sentiment noticed by many attendees. Also, there was little mention of the current hot topics that can impact the business environment; specifically: the economy, Obamacare, new industry regulations, minimum wage, etc.
BRAND TAKEAWAYS (mainly from the Breakout Sessions)
Group 1
- Reimage – Cheaper than majority of other brands with sales lift of 3-4%; yet, slow buy-in from franchisees. Our contacts state that the sales lift is not sustainable after 3 to 6 months and majority of smaller franchisees (1-20 units) have been struggling financially.
- Reimage – Project “Farm Fresh Refresh”: new look resembles Panera Bread featuring Bakery, Carryout and Catering areas.
- Bob Evans Express – Nontraditional mode of expanding affords almost limitless opportunities with minimal competition because of Bob Evans BEF food product line.
- Reimage – Slow buy-in (our contacts mentioned costs and loss of table tops as major concern. Like the look but don’t want to give up seating).
- Growth Plans – From CFO, Paul Flanders: “Growth plans consist of exercising our first right of refusal for acquisitions.” Where does that leave other franchisees for growth?
- New Unit AUV – $4MM to $4.2MM; older units AUV = $5.0MM.
- Menu Items – 80% of menu items are customized by guests from their large variety of sauces. Creates a situation where new items/new menus are not necessary.
- Pizzeria Locale – Fits their model. Will expand this concept.
- Shop House – No mention of this concept.
- Expansion – USA – Briefly mentioned for franchisees. There is increased interest for 2014. From our contacts: Two of the chain’s largest franchisees have begun expanding in 2013 (first time since 2010).
- Reimaging All by 2017 – Domino’s Reimage Program offers unique flexibility. Options range from simple signage changes to total remodel. Price ranges from $10K to $150K. Qualifiers are site specific. Pizza Theater look which features in-store dining will be the emphasis. (Domino’s is entering the dine-in business! Seems Casual Dining pizza is making an impression because Pizza Hut is also re-entering the dine-in business with its new look).
Group 2
Chili’s:
– Expansion – New store growth: launching efforts first official push since 2008.
– Table Top Tablets –
- Leasing system from Ziosk therefore no capital outlay.
- Paying for system through game purchases.
- Installing in 100% of tables per unit (Applebee’s installing in 50% of tables per unit).
- Early results: Improved guest satisfaction, 80% of customers using system to pay, higher tips, higher check average.
Maggiano’s:
- Launching expansion plans; four in 2014
Expansion for Both Brands –
- Taco Cabana: New testing in Atlanta; more upscale.
- Pollo Tropical: New testing in Dallas. Both efforts to see how they fit in different demographics – wise growth plan.
Ignite – Macaroni Grill – Will be a slow turnaround; changed out management. (Slower than they expected – brand’s reputation among consumers is very poor).
- New CEO – Leonard Comma – Strong operational background; perfect to fix speed of service issues at Drive Thru.
- Product Pipeline – Robust, excellent. Product rollout equals better sales at JACK.
- New Factory Store – Lower costs (missing land & building). Comparable weekly sales average = $30K. Original factory store weekly sales average = $40k. Pushing this for franchise growth (costs minus land run $650K).
- National Advertising – Paying off, strengthening brand awareness and SSS.
- New POS – Set to rollout in Company stores by end of 2014. Failed to mention that this is the third new POS system they have tried. Lost contract with Order-Matic (dropped Order-Matic before the new system was in place). Paying high month to month fees for service with Order-Matic and $70K price tag per location for new system.
Reimage: 8-10% Lift – Failed to mention not sustainable after 6 months. Slow buy-in because of the sustainability and costs.
High/Low Strategy: Premium/Value Price – Working. Wendy’s is the only brand thus far to master this balance and with a deep product pipeline (18 months), chances of continued success are great.
Reimage Part II – 40% of units need to be Scrape & Build! An alarming amount. Rebuild costs range from $1.5MM to $1.9MM and provide a short-term lift of 25-35%.