Monthly Archives: January 2012

Wendy’s talks new marketing, menu plans

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Wendy’s talks new marketing, menu plans

 
In 2012, the last place Wendy’s wants to be is “caught in the middle” — losing traffic on the high end to fast-casual brands or getting undercut by value-focused quick service or convenience chains, said Emil Brolick, chief executive of The Wendy’s Co.

Given that competitive landscape, Brolick said Monday at Wendy’s Investor Day, the chain will focus its energy and capital expenditures on menu innovation, corporate-store remodels and a new marketing campaign aimed to highlight itself as a premium quick-service brand, or one that offers a fast-casual restaurant experience for fast-food prices.

“We have a very clear vision of where we want to take this brand and how we’ll get there,” said Emil Brolick, the chain’s president and chief executive. “We have a number of platforms that will get us to an accelerated growth trajectory.”

He added that Wendy’s would target systemwide same-store sales growth between 2 percent and 3 percent while aiming to deliver on new positioning that chain officials call “A Cut Above.”

Innovation on the menu

New products, from reformulated core items like Wendy’s French fries and Dave’s Hot ‘N Juicy cheeseburger to a completely new line like its test of breakfast in several markets, drove Wendy’s success in 2011, officials said.

For 2012, Wendy’s is targeting improvements and line extensions around its chicken sandwiches, Frosty desserts, chili and baked potatoes, as well as premium products like the Black Label hamburger currently in test.

The Black Label hamburgers being tested now come in two varieties: Bacon Portabella, with portabella mushrooms, Muenster cheese and garlic aioli; and the Spicy Santa Fe, with guacamole, jalapeno, aged Cheddar-Jack cheese and a cilantro-lime sauce. They are being tested at price points around $4.49 to $4.69, representing a premium positioning over Dave’s Hot ‘N Juicy.

The brand also would add the breakfast platform to 50 locations it plans to remodel in 2012. Chief operating officer Steve Farrar said sales results are meeting expectations in markets like Phoenix, Pittsburgh and Kansas City, Mo., are increasing sales from a year earlier, even with marketing spending falling 10 percent and coupon activity falling to 20 percent of year-earlier efforts.

“We’re going to make a long-term incremental investment in marketing for breakfast,” Farrar said. “As far as breakfast expansion, we’ll continue to do so in 2012, including in a new market in the Northeast.”

Remodeling to drive results

Wendy’s also hopes to get more sales leverage through remodeling company-owned stores, in order to drive sales and prove the model to franchisees, officials said.

Brolick and others said the “Image Activation” remodels have increased sales at 10 locations that were reimaged in 2011, and 47 percent of the overall sales increase comes from dine-in sales, which has a higher average check than Wendy’s typical transactions from the pickup window or for carryout.

Wendy’s plans to remodel 50 company-owned stores and build 20 new corporate locations, and the brand expects franchisees to open 40 more units in 2012, Brolick said.

The keys to QSR breakfast success

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Quick-service restaurant chains looking to break into the market for breakfast — as Wendy’s and Taco Bell plans to do in 2012 — will need deep pockets for marketing and a strong coffee offering, researchers said.

Industry analyst Dave Jenkins, founder of market research and consulting firm CustomersDNA, shared key drivers for restaurants looking to enter a competitive scene during a conference call hosted by Bernstein Research on Thursday.

Jenkins noted that 64 percent of Americans visited a quick-service restaurant once for breakfast in 2011. That customer base is not expected to grow, he said, meaning quick-service brands will need to concentrate on frequent morning customers, especially “dual” customers who purchase food and a hot beverage — who average 11 restaurant visits per month.

RELATED: Breakfast shows opportunity for quick service

“Changing [morning restaurant visit] habits is very difficult,” he said. “The more critical number is the 10 percent of the population that’s in the marketplace for breakfast on a weekly basis. They’re pretty consistent. I don’t see much movement in the expansion of breakfast [from 64 percent of all Americans].”

For Wendy’s, which has set a goal to get breakfast items into 1,000 U.S. locations in the near future, and Taco Bell, which just launched its First Meal menu to 750 units in 10 states, to succeed in breakfast, they must steal market share from McDonald’s, Subway, Starbucks Coffee and Dunkin’ Donuts, Jenkins said.

Doing so depends on marketing and coffee, he added.

Media matters

In the past year in the quick-service breakfast market, “the big got bigger,” Jenkins said, noting that McDonald’s, Subway, Dunkin’ Donuts and Starbucks all increased morning sales and “fortified their breakfast and coffee businesses to protect themselves from each other.”

McDonald’s poured resources into hot coffee and its McCafe lineup to fend off Dunkin’ and Starbucks, while those coffee chains introduced new food offerings to cut into McDonald’s share. Subway built its breakfast market share to about 1.6 percent of the market, spending an estimated $50 million in advertising to do so, Jenkins said.

“It looks like many of the smaller chains and independents in the market — the people who weren’t doing all the advertising spending — lost breakfast market share,” Jenkins said. “Burger King lost some share as well. Marketing does work. You have to be out there all the time and persistent in getting your message through.”

He compared Wendy’s chances to successfully roll out breakfast with recent performance for Subway, which he estimated added between $35,000 and $45,000 per year to its average unit volume. Wendy’s has stated before that it is targeting $150,000 in incremental sales to its average unit volume of about $1.4 million.

B&N celebrates black history with in-store events, promotions

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NEW YORK — Barnes & Noble has announced that it will celebrate Black History Month with special events and promotions recognizing the significant contributions by African-Americans to the world’s social, political and economic development. Throughout February, Barnes & Noble stores will host Storytime events, promotions and celebrity appearances in stores and online at Barnes & Noble.com (www.bn.com).

According to the company, all stores will have a Black History Month display of books for all ages, including picture books for young readers and relevant titles for each age group. The display will include “Life Upon These Shores: Looking at African American History, 1513 to 2008″ by Henry Louis Gates; “Freedom Flyers: The Tuskegee Airmen of World War II” by J. Todd Moye, now in paperback; “We March” by Shane W. Evans; “Condoleezza: A Memoir of My Extraordinary, Ordinary Family and Me” by Condoleezza Rice; and “Our Children Can Soar: A Celebration of Rosa, Barack, and the Pioneers of Change” by Michelle Cook. In addition, Barnes & Noble stores will also highlight the artwork of acclaimed African-American artist April Harrison on an exclusive signature tote bag and journal, and on posters and signs in stores and graphics on BN.com. Barnes & Noble.com will also promote Black History Month with author features, relevant Nook Books and specially priced books, CDs and DVDs that honor the Black American experience.

Barnes & Noble stores across the country will host Storytime events with readings and themed activities, as well as local author events related to Black History Month. Barnes & Noble will also provide an educator kit that includes a Black History Month Idea Sheet, a Black History Month Timeline, and a Black History Month Title List for teachers to use in their classrooms.

Former Dick’s Sporting Goods exec named Meijer COO

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GRAND RAPIDS, Mich. — Meijer announced Friday the appointment of J.K. Symancyk to the newly created role of COO for the company, along with the addition of Peter Whitsett to the Meijer team as EVP merchandising and marketing.

“I am extremely pleased to announce this new role for J.K., as well as the addition of Peter Whitsett to the Meijer team,” said Hank Meijer, co-chairman and chief executive officer of Meijer. “As we position our company for continued growth, it’s essential that we have the proper structure and talent. This evolution of our leadership team under Mark Murray will help ensure our company’s on-going success in a very competitive industry.” 

Symancyk will report directly to Mark Murray, president of Meijer, and will have three direct reports: Janet Emerson, EVP retail operations; Rick Keyes, EVP supply chain and manufacturing; and Peter Whitsett, who will join the company as EVP merchandising and marketing, the role previously held by Symancyk.

Whitsett most recently served as EVP global merchandising for Dick’s Sporting Goods and has an extensive background in leadership roles with retail brands including Kmart and Radio Shack.

Q&A with Founder of The Gyro Company

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In an Allentown, Pennsylvania, shopping center, The Gyro Company is surrounded by fast-casual giants, including Five Guys, Panera Bread, and Firehouse Subs. But the little Greek concept isn’t taking the competition lying down.

The 51-seat, 2,100-square-foot Gyro Company features a funky attitude with giant cartoon images of Zeus and Athena painted on its walls, as well as a Mediterranean menu to set it apart. Its menu is led by its signature gyro sandwich and savory baklava. Just months after the restaurant’s opening in November 2010, The Gyro Company also secured a vendor deal with minor league baseball’s Lehigh Valley IronPigs.

The Gyro Company president Deb Colitas discusses the Greek-themed concept and its entrepreneurial mindset.

How did The Gyro Company come together?

My husband, Chris, is 100 percent Greek and we’re surrounded by Greek culture, including the food. We noticed this emergence of Greek products, like the popularity of Greek yogurt at the supermarkets, and we began to see the possibilities in foodservice.

It wasn’t our lifelong dream to open a restaurant, but we saw a market opening and a chance to build something special and different. We thought if we could find the financing, the price point, and a market for our food in this economy, then it would be a winner.

You sought financing from 22 banks before securing a loan to open the restaurant. How did you navigate that process?

With a lot of persistence, faith, and stamina. The big banks heard “restaurant” and “start up” in the same sentence and ran away. We understood it all came down to the business plan. We wanted a bank that viewed our plan beyond the mere numbers and saw the potential of the concept.

You’ve launched online sales within your first year. What sparked that venture?

We want to diversify beyond the brick and mortar and find the right ways to maximize production and revenues. Online sales are one way to do that, as is catering, another area we’re pursuing.

We got our online store up and running before the holiday. We’re just selling our homemade baklava for now, and we’ve got fun packaging that continues the funky attitude we have in the store. It’s also another case of seeing a market opening we believe we can fill. Outside of Harry & David and some little bakeries, there’s not much in the way of online options for baklava.

What’s your next step?

We’re keeping an eye on the periphery, but we want to be careful in our growth because we believe we can have success on our end. We’re getting interest from people who want to expand with us, theme parks and other ballparks are being receptive to us, and we’re excited to be a part of something bigger .

H&M profit drops in Q4, still on track to open 275 stores

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STOCKHOLM, Sweden — Swedish fast-fashion retailer Hennes & Mauritz reported Thursday that net profit for the fourth quarter dipped to $997.2 million from $1.1 billion in the year earlier period. Sales in December, the first month of H&M’s fiscal first quarter, were up 13% year-on-year in local currencies, against a forecast 12%. Same-store sales were up 4%.

“H&M stands strong in a challenging market. We increased sales by 8 percent in local currencies and continued to gain market share during what was one of the toughest years for a long time for the fashion retail industry in many countries. The fact that we have gained market share, proves that our customers appreciate our collections, which offer a wide range of inspiring fashion for everyone,” said CEO Karl-Johan Persson

Despite the surprise drop in Q4 profit, H&M said it would press ahead with its expansion, opening 275 new stores in its 2011/12 financial year, including its first in a Latin American market, Mexico. The chain operates about 2,500 stores in 43 countries.

“The new year has started well, with strong sales development in both December and so far in January. Most indicators suggest that the macro-economic climate in many of our markets will continue to be tough during 2012, but we have a strong belief in our offering and are convinced that H&M will continue to maintain its strong position as the year goes on. We are looking forward to an exciting year full of opportunities,” said Persson.

Starbucks 1Q net increases 10%

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Strong holiday sales in December helped drive a 10-percent increase in first-quarter profit for Starbucks Corp., the company said Thursday.

For the quarter ended Jan. 1, net earnings totaled $382.1 million, or 50 cents per share, compared with $346.6 million, or 45 cents per share, in the same quarter the previous year.

Commodity pressures, primarily coffee, continued to negatively impact the chain, resulting in a $105 million hit to operating income in the first quarter, the company reported.

Revenue rose 16 percent to $3.4 billion on a global same-store sales increase of 9 percent, reflecting a 7-percent increase in traffic and a 2-percent increase in average check, the company said.

The Seattle-based company’s consumer products group booked a 72-percent increase in revenue during the quarter, fueled by the Nov. 1 launch of Starbucks-branded K-Cup packs and the company’s decision last year to take packaged coffee distribution in house following a split from Kraft Foods.

“A very successful holiday season drove strong global same-store sales, which, combined with continued operational efficiencies, delivered record results despite continued commodity cost pressures,” Troy Alstead, Starbucks’ chief financial officer, said in a statement. “We are well positioned to continue to drive strong revenue and profit growth throughout this year, and in years to come.”

Starbucks’ first-quarter earnings also marked the first use of a new format that follows the company’s reorganized regional segments.

For the division now called the Americas, which includes the United States, Canada and Latin America, same-store sales increased 9 percent, reflecting a 7-percent increase in transactions and a 2-percent increase in average check. Segment revenue totaled $2.6 billion

U.S. locations account for about 90 percent of business in the Americas.

Same-store sales rose 2 percent in Europe, the Middle East and Africa. Revenue totaled $303 million.

The China, Asia, Pacific region, or CAP, showed the strongest results with same-store sales up 20 percent, reflecting a 15-percent increase in traffic, the company said.

Revenue for CAP totaled $166.9 million for the quarter, an increase of 38 percent over the prior year, in part because of the 85 new company-operated locations that opened over the past year.

China is the fastest growing international market, Starbucks said, with more than 500 Starbucks locations on the mainland.

During the quarter, Starbucks opened 241 new stores globally.

The company reiterated growth plans for 2012, which include the opening of 800 stores globally, including about 400 in the Americas, about half of which will be licensed.

About 300 new locations are planned this year for the CAP region, about half of which will be in China.

In Europe, about 100 new units are projected.

The company reiterated its expectations for mid-single-digit same-store sales growth for 2012, with strong growth in consumer products expected to continue.

Rihanna get her own “REALITY SHOW”

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Nothing says Thug Life like a fashion reality show…

Rihanna’s in the news for two things today! The 23 year-old posted photos of her new Thug Life tattoos on Twitter, and she also announced that she’ll be the executive producer of a new reality show that will look for the next hot fashion designers in the UK.

According to The Associated Press, Sky Living HD and Twenty Twenty will work together to produce the yet-to-be-titled fashion series. Strangely, Rihanna will work behind the scenes and not host the show; pop star Nicola Roberts of Girls Aloud (a UK pop group) will host. I guess maybe Rihanna wouldn’t have time to host since she’s always recording, touring, filming action movies and romping around beaches in bikinis?

The TV show will be like a very specific Project Runway: contestants will be required to create outfits for musicians and celebrities. The final challenge: create a dress for Rihanna to wear when she takes the stage July 8 at the Wireless music festival in London’s Hyde Park.

“It’s become more about taking a risk,” Rihanna said of her fashion style in Vogue last year. “When I am putting looks together, I dare myself to make something work. I always look for the most interesting silhouette or something that’s a little off, but I have to figure it out. I have to make it me. I think that’s the thrill in fashion.”

UK readers – will you watch the show? I’m a bit sad I won’t be able to at least scope out the first episode in the US!

 

 

“Fresh Air” era begins at JCP

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NEW YORK — The transformation of JCPenney into America’ favorite store will begin with dramatically simplified pricing strategy and promotional cadence supplemented by an improved product presentation that will allow the 110-year-old company to regain its personality with a new generation of shoppers, according to CEO Ron Johnson.

Johnson presided over an unconventional two-hour investor and media event Tuesday morning at New York’s Pier 57 that was attended by an estimated 700 people. The choice of location, a dumpy waterfront warehouse, was symbolic in that the space was transformed to a bright and airy venue. Attendees were led down a long white hallway with images of the retailers print promotions from the past year into a meeting room with large pale blue screens onto which were projected images of clouds while new age jazz played in the background.

Johnson proved to be quite a showman as he took the stage and offered a compelling recap of how department stores slid from dominance in the 1960’s to where JCP is at today, which is basically a sea of sameness, with no price integrity and an emphasis on private brands that make it seem at times as if apparel is being sold by the pound.

Johnson is out to change perceptions and attitudes about JCP, and the path to becoming America’s favorite store will begin with a dramatically simplified pricing strategy and an equally dramatic reduction in promotions.

Fair and square is how Johnson described the new approach to pricing. The company knows that shoppers don’t begin to make purchases until goods are marked down 40% so that is where going forward pricing will begin. No games, just everyday fair values designed to regain trust with shoppers.

The same philosophy is being applied to promotional efforts where JCP is shifting from a highly promotional strategy in 2011 that saw the company invest $1 billion to promote 590 unique events to 12 monthly events each of which will receive $80 million in marketing support and include a 96-page direct mail piece with a heightened editorial emphasis.

“This new pricing approach and promotional cadence will allow us to change our personality,” said JCP president Michael Francis, the former chief marketing office at Target that joined JCP shortly after Johnson arrived.

The emphasis on monthly events has other benefits as well, according to Francis, because it simplifies store operations and frees up merchants’s time for assortment planning as opposed to constant pricing changes and determining which items to feature.

Longer term, the key element of transforming JCP into America’s favorite store involves a merchandising overhaul that is dependent on “shops” within the stores. Beginning this August, JCP will begin converting departments within its stores to shops utilizing new five foot by five foot modular fixtures that can be stacked or used to create walls. The shops will come at a pace of about two every months for the next three years until 100 separate shops are in place by December 2015.

Restaurants kick off Super Bowl promos

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Restaurants kick off Super Bowl promos

From pizza and chicken wings to burritos and subs, restaurants hope to capitalize on the appetites of Super Bowl fans
 
Pizza Patrón’s Super Bowl promotion
Super Bowl XLVI will be the year’s most important game not only for the New York Giants and New England Patriots, but also for the restaurant industry.

The Feb. 5 contest is one of the biggest sales days for several pizza and wing brands, and many other chains not normally thought of for party food are planning big offers this year.

According to estimates from the National Restaurant Association, 48 million Americans will order takeout or delivery food from a restaurant while watching the Super Bowl. Another 12 million people are expected to visit a restaurant or bar to watch the game.

Day of dough for pizza chains

Pizza Patrón, the Dallas-based chain of 100 restaurants in seven states, is hoping not only to sell lots of pizza, but also to remind its customers that it offers chicken wings and several dips, said brand director Andrew Gamm.

“Super Bowl Sunday is not the biggest day of the year for us, but it’s in the top four or five, and we want to improve and capture more business,” Gamm said.

Pizza Patrón has introduced four new Party Paquetazos — which means “combo” in Spanish and is pitched toward the chain’s core Hispanic demographic — combining wings, large pepperoni pizzas and five-piece orders of QuesoStix. They range in size from a $34.99 Paquetazo of 30 wings, two orders of QuesoStix, two pizzas and three dips, to an $84.99 combo of 90 wings, four orders of QuesoStix, four pizzas and eight dips.

Wings are featured prominently because Pizza Patron is hoping to become a one-stop shop on game day for customers, who told chain officials that they often were making two trips to buy pizza and wings from separate restaurants, Gamm added.

“On average, wings are between 10 percent and 14 percent of our sales mix, but since they’re so synonymous with the Super Bowl, we saw an opportunity to capitalize,” he said. “We matched ourselves up against some wing concepts and what they offer, and tried to create the benefit that for the same price, you get pizzas in your deal as well.”

The brand isn’t hoping for just a rush of these party orders on Super Bowl Sunday, Gamm said, but hopes to kick off continued orders of the Paquetazos throughout the year.

“Our franchisees immediately asked if they could run this all year,” he said. “With our Hispanic-customer focus, soccer is real big with them, and that season runs through early June. We developed our POP and marketing materials to run for an extended period of time.”

Papa John’s Pizza also is looking to get a yearlong boost from the game as the official sponsor of Super Bowl XLVI and the National Football League. This year the Louisville, Ky.-based brand is tying a nationwide giveaway to the Super Bowl’s pregame coin toss, and is advertising the promotion with commercials starring founder John Schnatter and football players Peyton Manning and Jerome Bettis.

Through Feb. 1, people can vote at www.papajohns.com to predict whether the coin toss will come up heads or tails. If a majority of Americans vote the correct call, the more than 3,000-unit pizza chain will give away a one-topping pizza and a two-liter bottle of soda to every customer enrolled in its Papa Rewards online-loyalty program, to be redeemed the day after the Super Bowl.

“This won’t be an easy call for America, but as the official pizza sponsor of the NFL, it’s an easy call for Papa John’s to offer a promotion like this to our loyal customers,” Schnatter said in a statement. “The Super Bowl is the largest stage in all of sports, and it’s the biggest sales day of the year for us.”

Papa John’s set a single-day sales record last Super Bowl Sunday, selling more than 1 million pizzas.