Tyson Grows in Missouri

Tyson Food, Inc. is in the process of expanding its Sedalia, MO plant.  This project will allow Tyson to offer a better mix of products and more competitive prices.  A leader in the chicken processing industry, Tyson seeks to optimize the production mix at the plant while improving the facilities.  The intent is to upgrade to state-of-the-art technologies in all aspects of poultry processing with this multi-million dollar project.

 

Improvements and Upgrades

 

Some of the improvements planned for the expansion include additional deboning lines, upgrades to the wastewater treatment operations, and the development of several sections of the plant.  Improvements in the slaughter area are also planned.

 

Several areas of the plant will be restructured with an eye to improved ergonomics. This will improve work conditions for current employees and those who will be added as the construction proceeds.  Tyson has plans to increase employee numbers as well, with over 200 more jobs by mid 2014.

 

Keeping the Environment in the Forefront

 

The Sedalia plant has long been recognized by the American Meat Institute as being on the forefront of environmental trends.  The complex contains a hatchery, feed mill, wastewater treatment facility, live haul operations, the processing plant, and a rendering operation. The improvements planned for both the infrastructure and water treatment facilities will allow the plant to handle greater water volumes as the plant increases production with the addition of a third lagoon.  Other upgrades are also in the works.

 

Currently contracted with more than 125 poultry farmers in nearby counties, the Missouri plant produces fully cooked chicken products for grocery stores.  These products include patties, nuggets, wings, and breast strips used in various cooking applications.  While used primarily in home-based applications, variations of these products are also used in the food industry.

 

Staying on the cutting edge will allow Tyson to meet the growing needs of consumers while addressing environmental concerns and worker’s safety.

Has Starbucks reached Market Saturation?

The second financial quarter has been good to Starbucks Corp. with an 18 percent increase in net income.  There has also been a 7 percent increase in global same-store sales.  Company representatives have also indicated that it expects to open 1,000 stores this year, up from the previous goal of 800.

 

Of the new stores, 500 units are slated to be opened in the Americas, a region that includes the U.S., Latin America, and Canada.  Currently there are 12,570 units located in the territory – about 100 more than were available during the same quarter last year.  During the economic downturn, Starbucks has closed nearly 1,000 stores in the U.S. which didn’t perform well, but things have obviously turned around.

 

A Look Towards Progress

 

Company chair, Howard Schultz reports that U.S. locations performed “extraordinarily well” last year.  “Any thought of saturation” is premature, and the company believes that it will be able to maintain its plan to open the cited number of units.  Additionally, in Latin American countries such as Brazil where Starbucks currently operates fewer than 100 units, there is plenty of room for growth.

 

China’s Market is Where the Growth Is

 

The area where Starbucks expects the highest rate of growth is China.  Starbucks intends to open 400 units in the China Asia Pacific region this year.  Some store sales increased 20 percent for the quarter for the seventh consecutive time in China where half of the new locations are planned.

 

Increased sales of new products such as the K-Cup packages, Blonde Roasts, and fruit based drinks have helped produce a positive picture.  The chain will be introducing Evolution Fresh juices and a line of energy drinks called Refreshers in the coming months, all of which are designed to increase customer appeal to non-coffee drinkers.

 

Europe’s Market in Decline

 

While Europe has continued to be a challenge for Starbucks, the company continues to focus its efforts on achieving a turnaround.  Nevertheless, the sales increases in the UK and France were not enough to overcome decreases in other areas in the region.

3 Essentials for Successful Company Growth

New business owners often find the prospect of growth intimidating; however, the drive to open new units is a critical factor for success.  More units mean that you can employ economies of scale in areas such as marketing and purchasing.  There are several factors necessary if you wish to grow your business successfully in an increasingly competitive environment.

 

Begin with Your Existing Operations

 

Start by ensuring that your existing operations are profitable and stable.  They should consistently meet or exceed operating standards.  An accurate understanding of your finances, both the operational systems and profitability of each location, must be clear.   This goes beyond having cash in the bank; although that is important as well.

 

Hire New Employees Instead of Stretching the Demands of Current Ones

 

Next, take the time to invest in the human resources needed to support your anticipated growth.  New units require both time and physical resources to sustain operations.  You can’t expect to draw either from current restaurants without creating voids.  Have a team of individuals on hand specifically for use only in the new location.

 

Money Up-Front

 

Finally, obtain the capital you need to fund growth.  Don’t wait until a leasing or purchasing agreement has been reached.  Have the money on hand in advance.  If you have to draw money from other units to support the growth of the new unit, all of the locations could be endangered.  Lack of financial means will also take away from your focus on establishing the core business operations.

 

Wax on, Wax Off – The Importance of Focus and Discipline

 

Focus and discipline are necessary for any expansion you plan.  Management needs to be able to focus on both maintaining current operations while growing new human capital and locations.  Discipline will keep you moving along the growth strategy you determine necessary.

 

The urge to grow is strong when business is good, but without the proper resources, success is unlikely.  By taking the time to set your foundation, you improve your chances of a positive outcome.

Marketing Trends In the Food Industry

Several factors drive innovation in the food industry.  Lately, it seems, food trucks, comfort, and authenticity are behind many of the changes seen in menus country wide.  During difficult economic times, innovations on the menu helps to raise customer return rates, but authenticity is necessary to retention.

 

Nancy Cruse, the president of The Kruse Co. and a columnist for Nation’s Restaurant News cites, “a distinct uplift in the amount of innovation as it pertains to menu development” as a result of the changing economic environment.  That innovation falls into three categories: the customers’ demand for authenticity, food trucks that generate rapid advances, and creative comfort that results in slower menu changes.

 

Comfort in Change

 

Creative comfort is a driving force behind the changes see in foods such as gourmet waffles or pretzel-based sandwiches.  A well known food is adapted to meet the need for change while still appealing to those who desire a familiar taste.  Examples include Dunkin’ Donuts’ Waffle breakfast sandwiches or the chicken and waffles dishes available at IHOP.

 

Trucking In Innovation

 

Food trucks, most of which offer quick, easy, and fun fare, have the advantage of bringing their menu directly to the market.  They also don’t have to make huge investments to try something new.  As a result, many food trucks are the source for the unexpected when it comes to innovation in food service.  It doesn’t take long for their successes to make it into more mainstream locations.

 

Authentic Flavor and Tradition

 

If it seems to you that everyone is suddenly offering things like hand cut fries, boasts their connections to local farmers, or cite family recipes, you are absolutely correct.  Provenance, preparation, and promotion are all part of the authenticity package.  Customers seek a connection to their food these days, and anything that smacks of authenticity, whether on the menu or in the marketing, helps attract and retain a customer base.

 

Keeping up with food industry trends involve more than just constantly revamping the menu, it requires an awareness of what customers want.

March Numbers Indicate Good Sales

With numbers matching those from December 2011, the first quarter of 2012 has shown continued strong growth.  Restaurant owners reported higher same-store sales during March.  The Restaurant Performance Index, RPI, a standard used to evaluate the health and future of the industry, indicated a 0.3 percent rise over the numbers posted in February.

 

5 Months of 100+

 

March’s numbers follow four other months where the RPI was reported to be over 100.  This indicates that the foodservice industry is expanding in key areas.  Customer levels held high throughout the month and improved traffic and sales numbers implies that customers are spending more then they have in the last four years.  It is expected that these positive trends will spread to companies who supply restaurants as well.

 

Understanding the RPI

 

The RPI measures two different pieces of the financial puzzle.  The first is the Current Situation Index which evaluates trends within a particular venue by measuring sales, expenses, and traffic.  The second piece is the Expectations Index.  As the name implies, this evaluates the outlook of the business over the next six months.  Put together, the RPI gives a reasonably accurate look at how the food industry is doing and how it will be doing in the near future.

 

Good News for the Bottom Line

 

One of the potential advantages of continued profits is the likelihood of increased employment in the sector.  Only a small percentage of restaurateurs expect to decrease their staff in the upcoming months.  Additionally, may are expressing a degree of optimism in regards to growth and improved sales for much of 2012.  In fact, many operators are feeling quite positive about the improving economy, with nearly a third expecting an uptick in profits in the coming half year.

 

The main areas of concern which may put a damper on the upward movement are fuel and commodity costs.  Fuel costs traditionally rise during the summer months.  Commodity prices have also been creeping higher, forcing restaurants to increase prices.

Einstein Bros. Taps Into Light Fare

Einstein Bros. has made an aggressive move into lighter fare with an additional seven new entrées each with less than 350 calories.  The move is designed to position Einstein Bros. as the bagel brand which is healthier for customers.  The new selections join seven existing choices, and provide additional options for both breakfast and lunch while being marketed as the Smart Choices menu.

 

With innovative options such as the Asparagus, Mushroom & Swiss Bagel Thin for breakfast and a pair of Bagel Thin Melts for lunch, customers don’t lack for tasty selections.

 

Extending Bagel Thin Interest

 

The company’s Bagel Thin line was introduced in 2010, featuring thinner bagels with fewer calories and carbs.   Providing customers with a similar taste but much less bread, the Thin sandwiches have been very popular.  Smart Choices sandwiches are made with egg whites for breakfast, and chicken or turkey at lunch.

 

Additional entrees include two salad choices; Chipotle Chicken and Harvest Chicken.  Smoothies, yogurt parfaits, fruit, and soups are also part of the menu.  With less than 15 grams of fat and a price of $5.50 or below, the appeal is clear.  Already in place at Einstein Bros., the same selections are joining the menu at sister brand Noah’s New York Bagels.

 

To facilitate ordering, the new Smart Choices menu appears on a different panel.  Allergens are clearly marked as well.

 

Other Changes Keep Coming

 

Einstein Noah has also expanded its coffee menu with espresso-based drinks.  Available in both hot and cold varieties, the coffee selections have done very well, and future expansions are in the works.  April will see the addition of a new cold drink, the cold Caramel Blender, just in time for the warmer summer weather.

 

The innovations are clearly doing Einstein Noah no harm as the company posted strong forth quarter numbers in 2011, and is expecting the same in the first quarter of 2012.

 

 

Online Reviews; Blessing or Curse?

The pervasive nature of the Internet can be an advantage as well as a disadvantage for restaurateurs.  Useful for promotions, marketing, and connecting to potential and existing customers, the Web can also be used by the disgruntled to post negative reviews and harsh criticism.

 

Use the Negative and Turn it Into a Positive

 

How your restaurant copes with customer feedback posted online can make a huge difference in public perceptions.  The commentary found in such reviews is always helpful, providing you with the chance to improve your customer relations and make necessary changes.  This depends upon you making a proper response, not reacting out of anger or being overly enthusiastic.

 

The largest review sites are a mine of information.  Business owners should read customer comments and look for trends.  Individual reviews should not be given significant weight, although criticism needs to be addressed. Use the opportunity to establish a relationship with the unhappy customer and make an effort to resolve any problems they experienced.  Such responses are best managed privately unless they contain factual errors, and should be gently worded.

 

Learn from Your Mistakes

 

Dealing with reviews can be an emotional experience.  Having your work questioned is always challenging. An apologetic tone is more likely to have positive results than an aggressive rant.  Taking ownership of problems and fixing them may gain you a fan.

 

Responding to positive reviews is also important; it shows that you are interested in what your audience has to say.  Customers who go to the trouble of posting a public comment are already admirers.  Knowing that their review has been read and addressed by the restaurant is likely to turn them into enthusiasts who bring in additional business.

 

Developing Strong Relationships Can Equal More Customers

 

Positive or negative, all reviews are about developing a relationship with customers.  Open and transparent responses to negative comments, regular appreciation of complements, and a sincere tone will show that you are a serious restaurateur who values your clientele.

Striking a Balance Between Inflated Food Costs and Menu Prices

Wholesale food prices rose by 8% in 2011, the highest rate of increase in a very long time.  Fortunately, that rate will slow this year with a projected 4% increase.  This is still high when compared to previous numbers, forcing owners to get creative when striving to maintain profit margins.  Add to these projections the fact that customers are being squeezed financially in other areas, and it is critically important to be able to ‘justify’ your higher prices.

 

Higher Prices Accepted at Restaurants

 

It helps that inflation rates at the grocery store have been higher than those at restaurants. Customers are intimately aware of the increases at the checkout counter, and aren’t surprised to see similar changes when looking at the menu.  Furthermore, they are willing to pay more for the implied value that comes when eating out.

 

It all comes down to the perceived worth of the service provided.  As long as operators deliver good value and communicate that value to their customers, a reasonable increase in price is acceptable.  Many restaurants are addressing the rise in prices proactively by letting their audience know in advance of the changes in the menu.

 

Strategies to get Patrons to Accept the Price Adjustments

 

Restaurateurs have several strategies they can employ to help their patrons manage their checks.  Adjusting the menu so that profitable items which haven’t seen much of a price increase are promoted, offering smaller portions at a lower price point, including a prix fixe menu and stressing the experience all help the customer feel that they received value.

 

While there isn’t much an owner can do to reduce the costs of supplies, improving décor and service helps to validate a check that is slightly higher.  Dining out provides customers with more than just a meal; it is a complete experience.  Your visitors should come away with the feeling that they got what they paid for.

DineEquity Inc. Shaking Things Up Across the Board

DineEquity Inc., the parent company of IHOP and Applebee’s, reported a 5.5% increase in profits during the first quarter of 2012.  They also announced a purchase agreement for the sale of 39 Applebee’s locations that are currently company operated.  The units are being sold to the Potomac Family Dining Group LLC of Virginia.

 

Set to close in the third quarter, this deal is expected to net DineEquity about $25 million, reducing the firm’s sale-leaseback obligations to the tune of $40 million.  This is the second time that Potomac Family Dining has purchased restaurants.  Earlier purchases were made in the Washington, DC area.

 

DineEquity is moving towards refranchising and this sale will place about 96% of Applebee’s restaurants in franchise agreements.  This last transaction is part of an overall strategy and has helped boost numbers, but is only a portion of the total picture.

 

Julia Stewart, Chief Executive of DineEquity, states that the company is focused on innovative efforts that will help to differentiate each brand.  Applebee’s has replaced and upgraded almost everything on the menu in the last few years.  Particularly successful have been New Orleans-style dishes and the 2-for-$20 menu.  Additionally, 36% of the units have been renovated and more are due to be completed by the end of the year.

 

IHOP restaurants have not received as much attention, but DineEquity plans to continue work on the menu, focusing upon promoting the value message that’s so attractive to customers.  One such innovation was the recently revealed “7 for $7” menu selections.  These offer 7 meal options for only $7 each day.

 

IHOP will be launching a new marketing campaign in the second quarter.  The brand is moving towards healthier selections as well as low-calorie items so as to draw in a different demographic.  While DineEquity is still searching for the perfect value message for IHOP, franchise support remains strong.

Healthy Menu Innovations

Does the restaurant industry have a responsibility to address health issues when designing a menu?  Perhaps not, however, faced with a growing interest in healthier menu choices among customers, smart companies are making changes.

 

At least by perception, fast food restaurants are the worst offenders.  In fact, research shows that 60% of American’s are less than thrilled with their lunch choices.  Often the culprit is limited time.  This is a market to be tapped by forward thinking chains.

 

Arby’s now offers a Market Fresh Pecan Chicken Salad Sandwich and wrap.  This can be nutritionally improved by selecting whole-grain flat bread or honey wheat bread.  McDonald’s has made apples standard in their kid’s meals.  KFC even started serving roasted chicken rather than fried.

 

Often the solution is simple portion control.  When diners eat at upscale restaurants, they don’t expect large portions, they expect quality.  By offering smaller meals under more appealing labels, fast food restaurants may appeal to those who would prefer more nutritious options.

 

Of course, no matter how many options fast food restaurants provide, most customers will still choose foods they know are not healthy.  Lower salt and fat requirements mandated by the government is unlikely to make much of a difference.  The British Medical Journal showed that only one in six diners pay any attention to posted calorie and fat stats on menus.

 

Salt is the newest target to face criticism at restaurants.  As the flavor of salt is difficult to mimic, reduction of salt may be particularly hard to achieve, but the industry seems committed to make the change by offering selections lower in sodium.

 

Moe’s Southwest Grill is leading the movement and began using KCLean, a salt substitute, more than a year ago.  This product only contains 50% of the sodium found in regular salt.  The change was made with no publicity and there have been no complaints.  Other well known chains are now following suit.