Archive for October, 2011

Firehouse Subs Loses Infringement Case, May be Required to Pay Half a Million in Damages

October 27, 2011

The chain sandwich shop Firehouse Subs recently lost a trademark infringement suit it filed in federal court, and now may be ordered to pay almost half a million dollars worth of the defendant’s court fees.


How the Firehouse Lawsuit Started


It all began in 2008, when restaurant owner and county firefighter Heath Scurfield’s restaurant Calli Baker’s Firehouse Bar & Grill came under scrutiny by the national sub-sandwich chain. Firehouse Subs claimed that the word “firehouse” in Scurfield’s restaurant could potentially confuse customers into thinking the restaurant was part of the national chain, and that use of the word violated the sub-shops trademark.


An eight-person jury ruled unanimously in Scurfield’s favor in late August of this year. The jury also said that Firehouse Subs’ 2003 trademark application to use the word “firehouse” exclusively in the food service industry, was fraudulent.


The sandwich chain knew that many restaurants already used the word “firehouse” in their names, the jury claims. The implications may make Firehouse Subs wish it had never filed the lawsuit in the first place.


Lawsuit Ruling has Potential Disastrous Consequences for Firehouse Subs Chain


What does the fraud ruling mean for one of America’s largest sub-sandwich chains? For one thing, Firehouse Subs’ trademark will be canceled. The chain may face additional penalties from the U.S. Patent and Trademark office.


Naturally, the national chain wants a judge to set the jury’s ruling aside. Firehouse claims that the jury misunderstood the law and that there was not sufficient evidence to back up the fraud claim. If the judge declines, Firehouse will likely seek a new trial.


Firehouse Legal History


The Firehouse chain has aggressively defended its trademark, issuing 15 cease-and-desist letters and filing at least five different lawsuits in its time. Scurfield is the first to win a lawsuit against the chain.


In late August, Scurfield filed documents seeking reimbursement for $490,217.90 in lawyer fees. No damages have yet been awarded.

News Snippets

October 25, 2011

This time around: burger restaurants show great growth during the recession, while other restaurants are cutting down on the use of high fructose corn syrup.


Limited-Service Burger Restaurants Show Growth


Fast-casual is the way to go – at least, that’s the belief of many limited-service burger operators. The belief is firmly grounded in reality, too: The top 75 limited-service burger changes boasted a 1.6 sales growth last year that reached $65 billion.


The top 10 fastest-growing restaurants showed amazing growth, from Fatburger’s “low” 13.9% unit change, to Shake Shack’s 133.3%(!) unit change.


The burger segment is showing great growth, even though its rate of expansion has been slowing. The study was put together by industry research firm Technomic, and is available at the following link:


Restaurants Bucking High Fructose Corn Syrup


There has been controversy in health-conscious circles for years over high fructose corn syrup. Found in everything from candy to soda to common food items, the syrup has been blamed from everything from the United States’ obesity epidemic, to diabetes, to just about any weight-based health concern you can name!


Big-name companies like Pepsi, Sara Lee, Kraft, Heinz, Hunt’s, and even Gatorade have opted for sugar over high fructose corn syrup in many of their product lines. Many restaurant operators are beginning to follow suit.


Take for example Fairmont Hotel’s Executive Chef Gavin Stephenson in Seattle. He decided to remove both regular and high fructose corn syrup from his menus shortly after getting rid of trans fats.  He feels responsible for each of the 400,000 yearly meals he oversees, stating: “I can’t change what people eat every day, but I can make a difference to those people who eat here.”


He makes a good argument about how to fight obesity. Since our eating habits haven’t changed, he says, maybe we should do something about what’s in the food we eat instead. He claims that more natural sweeteners are best, stating that “Our great grandparents had no problem” with staples such as sugar, honey, and butter. He recently installed beehives on the Fairmont’s roof so that he would have an endless supply of “clean” sweetener. If that’s not walking the walk, we don’t know what is!

Dominos Sells Restaurants to Atlanta Franchisees

October 20, 2011

Dominos has been doing a lot of restructuring in the last handful of years. Marketing guru Dan Kennedy referred to them being pulled “kicking and screaming to develop a pizza that actually tastes good.” Regardless of what you think of the quality of the chain’s pizzas, they have an undeniable recession-proof business model.


The company has been going strong since it was founded in 1960, and shows no signs of succumbing to the recession. As of this writing, Domino’s boasts nearly 9,500 company-owned and franchised stores spanning the United States and more than 70 international markets.


Domino’s Pizza in Atlanta


The chain cites 118 locations in the Atlanta metro area. Its recent sale of 30 stores to franchisees leaves eight company-owned locations in the area.


“There are terrific, proven operators in Atlanta, and this is an opportunity for them to grow,” says Domino Executive VP of franchise operations and development Scott Hinshaw. “Local, hands-on leadership is crucial to our success worldwide, and Atlanta is an important market for us.”


The company plans to sell the remaining eight restaurants to franchisers in the near future. It also closed down two stores in the area, in the towns of Hampton and Hiram.


Who’s Buying All the Dominos?


The largest buyer of the Atlanta locations is Mike Orcutt, Dominos’ former VP of Operations. His company, Cowabunga Pizza Inc., now owns 93 Domino’s locations in Alabama, Georgia, and South Carolina.


The company also sold nine of its stores to Greg Fox, a franchisee who now owns 38 of the chain’s locations. The company sold five more stores to operator Todd Dyrda, who now has seven stores. The last two stores went to new franchisee Tim Garrett.


Dominos in Florida


Earlier this year (June of 2011), NRD Holdings LLC, an Atlanta-based company, bought 23 Domino’s locations in Florida. The company is one of the biggest fast-food franchisers in the U.S.


What does all this selling-to-franchisers mean? Smart chain store owners should take note–Dominos hasn’t been around for half a century because of good luck. Company leadership apparently believes that smart franchise owners are the way to go to weather our current recession.





Ocean City, NJ Rejects BYOB Initiative – For Now

October 18, 2011

A recent initiative to bring BYOB (bring your own booze) into New Jersey’s Ocean City restaurants was struck down on the last day of August this year. The Committee of Petitioners for the initiative unanimously decided to withdraw their petition to allow voters to decide the issue this November. But why?


They cited a New Jersey state statute that does not allow restaurants to regulate how much alcohol their guests are allowed to bring in to the location.


Instead, the committee now aims to get the statute changed, then (hopefully) put the BYOB issue to test with the voters in 2012.


Ocean City currently has no bars and no liquor stores. It also does not allow alcohol sales at its restaurants.


Opposition to the BYOB Initiative


Many restaurant owners who are happy with the city’s no-liquor-sales ordinance, are ironically also pro-BYOB. They claim that alcohol use is a personal choice that would help many of their patrons to enjoy the restaurant experience even more.


There are other residents of the town, however, who are afraid a bring-your-own-booze ordinance would damage the city’s family-friendly reputation. Opponents argue that, just as with a gated community, new residents of Ocean City know the restrictions when they move in.


The town has been “dry” since it was founded in the 1879. With miles of guarded beaches, a two-and-a-half mile boardwalk, and a historic-style downtown shopping area, Ocean City has been known as a safe and family-friendly location for over 100 years.


One City Councilman stated that, “I certainly do [drink] and the town could float a battleship just with the booze that’s in the lockers in the homes,” but that many homeowners buy in Ocean City because alcohol is not publicly sold nor served.


Ocean City Mayor Jay Gillian, a stout critic of the BYOB initiative, is not ruling it out 100%. Instead, she is recommending it be put to a vote by the city’s residents. If the BYOB petitioners have their way, residents will get just that chance come next fall.



Wendy’s Company Gets a “New” CEO

October 13, 2011

Wendy’s recently brought on new President and CEO Emil Brolick. Coming into the position on September 21st, he will receive training and advisement for the rest of the year from outgoing CEO Roland Smith.


Brolick is not exactly new to Wendy’s. He worked on the company’s national marketing plan in the 80s – a plan that fueled 16 consecutive years of same-store sales growth for the chain. His most recent accomplishment is helping turn Taco Bell stores around and provide more same-store sales growth for that franchise.


What’s Going On with Wendy’s?


But a new CEO at the helm isn’t the only major change going on at Wendy’s, says Wendy’s Company chairman Nelson Peltz. Brolic recently told the media that the fast-food restaurant will be re-engineering the core menu (among other things) now that it has sold Arby’s. The plan is to concentrate as much as possible on Wendy’s success.


A CEO Who Carries a Vision


Brolick worked with the Wendy’s team for 12 years, leaving in 2000 to join Yum!Brands. He also did a stint as President of A&W All American Foods and Long John Silver’s.


More importantly, however, was his association at Wendy’s in the last days of the 20th century. Brolick worked closely with founder Dave Thomas to provide strong consumer insights that helped strengthen and fortify the Wendy’s brand.


“Wendy’s is one of the most attractive growth stories in the quick-service restaurant industry,” said Brolic recently. “I am excited to be rejoining the company at such an important point…We will focus on building significant value for all stake holders.”


More than Just Burgers


Brolick’s history of success also includes a Taco Bell turnaround. As its President and Chief Concept Officer, Brolick lead the chain through five years of same-store sales and profit growth.


But Wendy’s new CEO isn’t just about food and profit. He is also Chairman of the Board of Governors of the Boys & Girls Clubs of America.


Outgoing CEO Smith says he looks forward to supporting Smith as Brolick continues to grow Wendy’s sales. The former Wendy’s CEO is stepping down to spend more time with his family in Georgia, he said.


Restaurant News Snippets

October 11, 2011

Today’s news includes new Dickey’s Barbecue news (they are growing!), reports of how Tropical Storm Irene impacted the restaurant business (and how we helped storm victims), and how FEMA uses a certain chain restaurant to help it figure out the state of things in disaster areas.


Country Musician New Owner of Dickey’s Barbecue Pit


Country singer Guy New recently opened a new Dickey’s Barbeque Pit store in Texas. The chain originated in that state, and now has 171 locations in 38 states. The franchise cites its modest goal of having 200 total stores by year’s end. The first Dickey’s opened in 1941.


“Dickey’s Barbecue serves quality barbecue at a great price and really strives to make a difference in the community. The decision to open my own Dickey’s franchise was simple,” says New, who is opening the store in Rowlett, TX. The new location will be the second Dickey’s franchise in that town.


“We are excited about expanding in our home state,” says DBRI President Roland Dickey, Jr. “It’s important to always remember where you came from and where it all started.”


East Coast Eateries Help Flood Victims, Show Good Numbers


A number of east coast restaurants provided more than just food for those affective by Irene earlier this year. While it’s true that patrons came in for food that they often couldn’t cook at home (due to power outages, etc.), they also came in for another reason:  to stay close to family and friends.


Many patrons whose home Internet connections were out came to the restaurants specifically to access their email and social media. Quite often, it was the only way they could let out-of-town family know they were doing well.


Many operators reported doing Friday-night numbers on Monday afternoons! Others reported holiday-type traffic in the days after the storm hit.


FEMA Uses “Waffle House Index” to Judge Disaster Severity


Did you know that FEMA uses Waffle House to help it determine just how bad a disaster really is? It’s true!


When locations of the franchise in affected areas serve the full menu, the index is green. The index is pushed to yellow when Waffle House offers a reduced menu–usually a sign of using power generators and/or dwindling food supplies. When Waffle House locations are closed in an area, then the index is bumped to red. Strange as it may sound, the “Waffle House Index” is probably a very good practical indicator of conditions in an area.

What are the Top Quick Service Restaurants in America?

October 6, 2011

This past August, Market Force (a Boulder, CO firm that researches consumer trends) surveyed 4,500 customers around the nation to find the most popular quick-service locations in the United States. Their finding? That it’s not always the quickest fast-food restaurants that are the favorites.


Who are America’s Favorite Quick Service Restaurants?


The Market Force survey asked respondents to rate the restaurants in areas like friendly service, atmosphere, food quality, healthful choices, cleanliness, kid-friendless, and greenness/sustainability.


“Minimalist” burger restaurant Five Guys didn’t dominate any single category. The chain did however score consistently near the top in every single category. Five Guys emerged as customers’ favorite over all others, coming in at 7%.


Coming in right behind them at 5.9% was West Coast burger chain In-N-Out Burger. Chick-fil-A came in third at 4.1%, with Panera Bread a close fourth at 4.0%.


Chipotle and Panda Express rounded out the “one percent and over” category with 2.7% and 1%, respectively.


But What About McDonald’s?


Fast food giant McDonald’s finished the overall survey with only 0.3% of the vote! But this rating only reflects the combined influence of several different categories.


McDonald’s actually scored second – just behind Sonic – for speed of service. Along with Burger King, Wendy’s, and Subway, however, it ranked close to the bottom of the overall list.


What gives? Aren’t these chains actually more popular than Panera, Five Guys, etc.? After all, you can’t find the top-scoring restaurants just anywhere; in fact, In-N-Out exists almost entirely on the West Coast! But you can find a McDonald’s in virtually every town in America.


We think it likely comes down to the fact that the most convenient choices aren’t always our favorites. After all, Panera may take a little longer to make your food than you’d wait to get that Whopper, but you’re a lot more likely to relax for a few minutes in the St. Louis-based bakery chain.


Could the survey be skewed? After all, Market Force’s clients include Five Guys, Panda Express, Panera and Sonic…


We think this is probably not the case, however. Market Force’s clients also include McDonald’s. If Market Force were going to skew its results in someone’s favor, our guess is that it would be McDonald’s. But this was obviously not the case. We’d like to offer our congratulations to Five Guys, In-N-Out, Chik-fil-A, and Panera!

Subway Sandwich Chain Goes Green

October 4, 2011

The Subway restaurant chain recently announced that it will open five new “Eco-Restaurants” that will have a reduced impact on the environment. The new environmentally friendly restaurants will reduce energy and water consumption, and deal with waste differently, all in cost-effective ways.


Marketing Director Elizabeth Stuart handles the chain’s social responsibility efforts. In a recent press release, she stated, “As the largest franchise chain in the U.S., we know we can make a real difference and are working towards that goal.”


Subway Gets LEED Certification


Two of the five restaurants were recently opened in North Carolina in the towns of Durham and Cary. The U.S. Green Building Council honored the locations with LEED certification (Leadership in Energy and Environmental Design).


LEED is a third-party certification program. The program focuses on high-performance building operation, construction, and design.


Subway’s Eat Fresh, Live Green initiative tries to spur its franchisees to create Eco-Restaurants. Even those who can’t fund or otherwise work a restaurant rebuild are doing their best to work green elements into their locations. These green elements include energy-saving appliances, low-flow toilets, faucets that automatically shut off, and more.


Franchisees Practice Green Innovation


George Estep recently opened a Subway Eco-Restaurant in Kokomo, Indiana. He made the free-standing drive-through restaurant entirely out of recycled materials. The store also boasts a large monitor that displays the location’s real-time energy usage.


North Haven, CT sports two different Subway locations at two of its Merritt Parkway rest areas. These restaurants sport energy-efficient air conditioning systems and a “light harvesting” system that uses solar panels. Another location in Ephraim, UT uses solar panels to generate electricity.


Further Green Subway Locations


Subway will soon open an Eco-Restaurant in UCLA’s student center. The center was recently renovated in an effort to “make it green”. Among its new features are a (walkable) rooftop garden and terrace.


Subway is also changing its packaging and materials nationwide in an attempt to make all of its locations more environmentally friendly.