Broad Street Licensing Group Food News

Going Private: PF Chang’s

May 4th, 2012

P.F. Chang’s China Bistro has been one of the bright spots in restaurant brand licensing. Now it is going private.

Food giant Unilever has amped up over $100MM in sales of licensed P.F. Chang’s frozen bagged skillet meals, largely with a mixture of a decent product and a lot of TV ads and promotional dealing. The retail products have significantly outperformed the restaurant chain, which had hoped to capture some luster with its 170-door Pei Wei Asian Diner & Asian Market. The most-recent results showed same-store sales down at both concepts, with profits off as well. Industry analysts have pointed out how Chang’s is lagging behind other casual dining chains that have seen a rebound recently.

This article in Nation’s Restaurant News describes how private equity company Centerbridge Partners L. P. will pay $1.1bn for the chain. Chang’s is joining other restaurant concepts that are being bought up by private equity money.

Centerbridge had already waded into the foodservice category by purchasing Rock Bottom Restaurants and Gordon Bierisch Brewery Restaurant Group in 2010.

Posted in The Restaurant Business | No Comments »


Health & The Environment

May 3rd, 2012

  • After long delays, the FDA’s Food Advisory Committee will look at potential risks from food coloring. Science has so far been unable to find a link between colorings and health risks with the exception of a 2007 UK study showing they could aggravate hyperactivity problems in kids. The EU effectively banned food color additives last year by requiring warning labels. The Center for Science in the Public Interest has urged the FDA to ban synthetic food dyes, as well as requiring warning labels on products still containing them. The committee’s role is to advise, so it could shape further regulation later on.
  • The British government will act on recommendations of its Scientific Advisory Committee on Nutrition and urge Britons to eat no more 1 pound of red meat per week (2.5 ounces/day). That’s almost half the previous recommendations promulgated in 1998. Numerous studies have linked eating red meat to bowel cancer.[1] Warnings about eating processed meats like ham, bacon and sausage will included avoiding feeding them to children.
  • Claims for the benefit of eating dairy products received a blow after a Dutch research team found “neither very harmful or very beneficial” results for longevity.[2] The 10-year study saw no link between the risk of death and dairy consumption in adults that reached 55-69 years, though women added a 4% increased risk of dying for every 10 grams of butterper day in their diets.
  • Despite a Federal Trade Commission (FTC) crackdown that forced it to retreat from health claims about drinkable Activia probiotic yogurt, Dannon USA saw sales rise to $444MM in 2010, up 16% from $383MM the year before and $161MM in its launch year, 2006.[1] Dannon insists a settlement with the FTC did not “gut” its health claims, though the company has softened them to “Love the way you feel” instead of claiming Activia promoted digestive health. Recent marketing is back to touting the product as promoting regularity, which stems from the inclusion of inilin, a by-product of chicory root, that is not digestible and therefore qualifies as “fiber” (though technically it has no actual fiber content).


    [1] Source: IRISymphony. Date includes supermarkets, drugstores & mass merchandise outlets, but does not include Walmart.


    [1] Research suggests red meat and processed meats can lead to breast, bladder, stomach and other digestive cancers, though the link is weaker.

    [2] Source: the American Journal of Clinical Nutrition.

Posted in Environment, Government Regulation, Health | No Comments »


That’s Why They’re Called “Fast Food”

May 2nd, 2012

First of all, greetings from Bentonville!

Are we surprised that Quick Serve Restaurant brands dominated the recent Global Brand Simplicity Index created by consultants Siegel+Gale? Six thousand consumers around the world[1] rated brands based on “ease, transparency, innovation and communication,” and McDonald’s was #1, followed by KFC (#4), Burger King (#5), Pizza Hut (#7), Starbucks (#8) and Subway (#10). Retailer Walmart, a big player in groceries, came in sixth. The survey found that 5-17% of US consumers would pay a 5% premium for products and interactions with brands that were simpler. When focused just on the US, the top brands were:

  1. Netflix
  2. Subway
  3. McDonald’s
  4. Dunkin’ Donuts
  5. Burger King
  6. Walmart
  7. Trader Joe’s
  8. Kroger
  9. Starbucks
  10. Old Navy

[1] China, Germany, India, the Middle East, United Kingdom and the United States.

Posted in Retailing | No Comments »


Tasty Tidbits

May 1st, 2012
  • Mmmm, “the airline cookie spread.” Sounds yummy. Belgium’s Biscuiterie Willems is looking at that trade name for its speculoos spread, a form of caramelized cookie, that’s being launched here as a nut-free peanut butter substitute by rival Lotus Bakeries.
  • In order to handle projected growth in Florida, Publix Super Markets Inc. will double the capacity of its 550,000-sq. ft. warehouse in Lakeland.
  • The first of a projected series of small-footprint Targets under the banner CityTarget will open next year in Chicago.
  • K+S Kali from Germany is launching a new food-grade potassium chloride as a salt replacer called KaliSel.
  • MaMa Rosa’s has introduced Pizza Grillers that cook on the grill or in their packaging in less than eight minutes.
  • In other product news, BAB, Inc. has introduced a French Toast breakfast sandwich featuring a toasted & buttered French toast bagel, sausage, and maple syrup with the possible option of a scrambled egg.
  • New food items containing the product descriptions “Caribbean” increased 150% from 2009 to 2010, with “Japanese” products up 230% and “Thai” ones up 68%.[1]

[1] Source: Mintel’s “Global New Products Database.”

Posted in Tasty Tidbits | No Comments »


BREAKING NEWS: Safeway Possibly Takeover Target

April 30th, 2012

Various financial activities described in this excellent & detailed article have led some on Wall Street to conclude Safeway may be a target for takeover.

The chain had a troubled ride through the Great Recession, largely because of consumer perception it was high-priced and not in-tune with the new economy. Recently management has instituted several steps consistent with a possible takeover, including a stock buy-back and “golden handcuff” provisions for key executives that would prevent them from being fully-vested should they leave after a takeover.

Chairman & CEO Steve Burd insisted Safeway’s $1bn repurchase of its stock was simply “a normal course of events” prompted by management’s belief it could drive top-line sales, not indications his team is preparing for an offer.

Sales for the chain were $10bn for the first quarter of 2012, up 2.4% but mostly due to more stores, sales of gasoline and its Blackhawk gift card network, not from improved performance.

Posted in Grocery Stores | No Comments »


Breaking News: Darden Brings Olive Garden Dressings to Sam’s Club

April 27th, 2012

This article in the Orlando Sentinel finally lets the cat out of the bag.

We were aware of Darden Restaurants looking at retail option at least 18 months ago. We can’t elaborate on the details, but suffice it to say the chain was casting about for guidance on whether and how to take one or more of its brands to retail. Now, after some study, the company is dipping its toe in the retail waters via Olive Garden shelf-stable dressings and shredded cheese at Sam’s Club.

It’s a safe strategy, since Sam’s charges no slotting costs, and probably will give Darden some consideration for the exclusivity. The royalty rates quoted in the article are baloney, but that’s because few know the real rates for licensed foods. This looks and feels like something done directly by Darden through Sam’s, though it’s hard to know these days with many restaurants playing their cards close to their chests. Our company does not, for example, discuss or publicize all its clients or their activities.

There is some question about the level of quality of the dressing, which isn’t surprising. The “taste palette” of non-refrigerated dressings is relatively limited. Refrigerated dressings generally are higher in quality, but more expensive and increasingly squeezed out by mega brands Marzetti and Ventura Foods‘ Marie’s. Marzetti is co-packing the Olive Garden dressings.

Food industry insider and “Grocerant” blogger Steve Johnson likes the news, which he says is part of a $300MM investment by Darden in Asia to improve their shrimp & lobster business.

Posted in Consumer Package Goods (CPG), Grocery Stores, Licensing, Licensing News, The Restaurant Business | No Comments »


Baja Fresh In Turmoil

April 26th, 2012

Mexican fast casual concept Baja Fresh Mexican Grill has switched CEOs.

The company has announced that 0wner David Kim will be leaving to pursue “other interests” and has been replaced by Chuck Rink, president and COO.

Apparently those interests include selling the chain, which Kim bought from Wendy’s for ten cents on the dollar in 2006 ($31MM). Wendy’s had purchased the chain in 2002 for $275MM, another example of a disastrously wrong acquisition strategy. Baja Fresh, as the name implies, focuses on freshly-prepared items, as opposed to Wendy’s usual fast food menu. Results declined annually even after the sale to Kim’s group, though analysts now think the worst is behind the chain.

Broad Street Licensing Group has some experience with Baja Fresh’s attempts to go to retail: determined to enter the fresh-prepared/chilled space, we brought them a client noted for its retail products. The conversations went nowhere because Baja Fresh insisted on exact replicas of its burritos and other wrap-type entrees. Unfortunately, wraps and other grain-based items fare poorly in the modified atmosphere packaging of fresh-prepared foods, and so the discussions went nowhere. To our knowledge, Baja Fresh’s products are not at retail in any meaningful presence.

Posted in The Restaurant Business | No Comments »


Microwave Continues Replacing Stove

April 25th, 2012

It’s no secret that Americans are cooking less.

But now there are some numbers to back up the declining “use of stove.”

According to NPD Group,[1] meals prepared on a stove top dropped from 52% in 1985 to 33% in 2009, while microwaving soared to over 30%. The impact on snacking and prepared foods is obvious, and will translate into robust growth in frozens packaging, perhaps nearly 4% annually through 2013.[2]The overall frozens packaging market could hit $5.7bn as new “breakthroughs” make microwavable products better. New improvements could include a multi-component meal where the package and its internal shielding can cook components that require both steaming and crisping, and breaded items like chicken nuggets that remain crispy on the outside and moist inside.


[1] Source: NPD’s “24th Annual Report on Eating Patterns in America.”

[2] Source: Cleveland’s The Freedonia Group.

Posted in Consumer Trends and Habits | No Comments »


Tasty Tidbits

April 24th, 2012
  • While the restaurant industry opposes regulations mandating paid sick leave for workers (though management and owners have them), a 2007 law in San Francisco mandating paid leave has been deemed a success for workers and involving few issues for employers according to a study.[1] The California legislature is considering a law that would extend coverage throughout the state.
  • Family restaurant concept Fazoli’s joins a long line of operators who have tried to make outlets in Walmarts work. Subway and McDonald’s are notable predecessors who pulled out of the partnerships. Fazoli’s even cited the fact they were taking over from another operator as a reason the deal worked for them. The company plans expansion in “non-traditional” outlets such as stores, college campuses, airports, or c-stores and gas stations.
  • Troubled retailer Great Atlantic & Pacific Tea (A&P) has already shuttered 25 stores in 2010, and is asking its bankruptcy court for permission to close another 32.
  • Love your grocery store? Publix Super Markets was the top pick in the 2010 American Customer Satisfaction Index. But don’t be surprised: Publix has won every year since 1994, though its rating dropped 2 points to 84. Second place finisher Whole Foods Market improved 4% to a 79 rating.
  • Break out the champagne: Sovena USA has been named “product of the year” by market researcher TNS for its Olivari Mediterranean Olive Oil’s innovative bottle cap. When opened, a Pop Up Pourer emerges that retracts when the cap is put back on.
  • In further indication of how grocery stores are evolving at the expense of other food & beverage outlets, Ohioans can now get draft beer at their local grocer. Or at least at some of them like Whole Foods. Bring your own growlerand tank up! Party on, Garth!

[1] Source: the nonprofit Institute for Women’s Policy Research (IWPR) in Washington, D.C.

Posted in Tasty Tidbits | No Comments »


Marketing Trends

April 23rd, 2012

  • Starbucks continues its push into alternative channels of distribution by partnering with Courtesy Products for in-room coffee service to hotels. Courtesy’s CV-1 on-demand brewed coffee system is used in a half-million hotel rooms in the U.S. The company says the in-room market is in its infancy, and sees the move as part of its roll-out of VIA for reaching non-restaurant coffee customers in this country and throughout the world.
  • General Mills has won support from the Better Business Bureau’s National Advertising Division (NAD) supporting its ads claiming its Progresso Light Soups are “Now Even Better.” The Campbell Soup Company had challenged the ad campaign, and General Mills was required to show how the product was improved (including increasing the size of chicken pieces, upping the veggies, improved beef quality, and a reduction in sodium.

Posted in Marketing Trends | No Comments »


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