Subway Says Breakfast a Success

Four months after debuting its breakfast menu, expansion plans are set

Elissa Elan reports in Nation’s Restaurant News that after serving breakfast for four months, Subway said the daypart has increased sales systemwide and exceeded expectations, leading the sandwich chain to expand the early-morning menu with limited-time offers and explore the service of more coffee or espresso-based beverages.

In an interview with Nation’s Restaurant News, Larry Varvella, Subway’s research and development project leader, said the chain’s foray into breakfast — a daypart filled with heavyweights McDonald’s and Dunkin’ Donuts — was a success for the brand and its franchisees.

“We’re very excited that our initial results show it is outperforming even our original expectations,” Varvella said. “Those original expectations were based on our franchise owners breaking even at the least. Of course we fully realized that to be a major player [at breakfast] we needed a long-term commitment. We figured that would be a three-to-six-month period. The last thing we wanted was for our owners not to be profitable.”

The Milford, Conn.-based quick-serve sandwich chain introduced its breakfast program April 5 to more than 25,000 Subway restaurants across North America. The menu features egg and cheese sandwiches served on whole-wheat English muffins, flatbreads or Subway’s traditional 6-inch and foot-long hoagie breads at a prices ranging between $1.75 and $2.25 for the English muffin melts, $2 to $3.50 for the 6-inch hoagies or flatbread sandwiches, and $4 to $6 for the foot-long variety.

The chain entered breakfast as more research highlighted the daypart’s growth potential and popularity with consumers. According to a study conducted by market research firm Mintel Research earlier this year, the breakfast foodservice market is expected to grow 13 percent through 2014. In addition, two of the fastest-growing menu items at quick-serve restaurant chains are specialty coffees and breakfast sandwiches, according to NPD Group, a marketing research firm based in Chicago.

More sandwiches are on the way, Varvella said, although he would not disclose what was in test or when new items would debut.

“We are definitely looking at introducing new items through limited time offers,” he said. “We fully believe that new products are one of the life-bloods of a restaurant chain. We want to keep [the program] new and exciting, and have a lot of items in the pipeline.”

He added that Subway also is exploring the possibility of expanding its beverage line to include espresso-based and flavored coffee drinks.

“Coffee has been a very strong part of our program,” Varvella said. “We’re looking at expanding with Seattle’s Best above and beyond standard drip coffee.”

Though Varvella would not disclose sales for the breakfast program, he indicated there are several barometers that have determined its success, including the acceptance by Subway franchisees.

“The franchisees are happy and the customers are buying the product,” he said. “In the past the menu mix was higher in non-breakfast items, but now we’re seeing equal amounts [in sales] of about 50 percent breakfast and non-breakfast, which, again, is ahead of projections.”

Varvella noted that the two best-selling breakfast items include the egg white western melt and the double bacon and cheese omelet. Latest promotions have highlighted the steak, egg and cheese sandwiches.

Read more at: Nation’s Restaurant News

P.F. Chang’s, Burger King, Jamba Juice sell frozen food

Bruce Horovitz reports in USA TODAY that some of the most familiar names in the restaurant world are moving into the grocer’s freezer.

P.F. Chang’s, Burger King and Jamba Juice all have recently licensed their names for new products to be sold in supermarkets. They join other high-profile restaurant chains including Marie Callender’s, Starbucks, T.G.I. Friday’s and California Pizza Kitchen, which already have substantial presence at the grocery store.

The most recent moves come at a time when many former frequent diners — scared off by the recession — are not returning to restaurants. “It’s a search for new revenue streams,” says Robin Lee Allen, executive editor at Nation’s Restaurant News. “It’s also a way to keep the brand top of mind.”

It’s also a way for a chain to familiarize consumers with the brand before entering a new market with restaurants, consultant Linda Lipsky says.

New freezing technologies that are better at keeping items tasty have made the grocery’s frozen-food aisle almost a “no lose” proposition, says Bob Garrison, editor of Refrigerated & Frozen Foods, a trade magazine.

Among the newer name brands at markets:

•P.F. Chang’s. Even with new methods, frozen food isn’t going to taste exactly like fresh — which makes Chang’s deal with Unilever to make eight frozen meals-for-two ($7.50 to $10) compelling. Chang’s, with 172 restaurants in 42 states, has built its reputation on offering great taste in its food. The question is, can Unilever’s new freezing technique do the trick?

“There were enormous discussions,” says Michael Welborn, head of global brand development. “We can never do anything to tarnish the brand.”

Based on its success with the Bertolli Italian frozen-food line, executives at Unilever convinced Chang’s that they could work the same magic on its Asian entrees. But, says Gaston Vaneri, frozen-foods marketing chief at Unilever, the company also needed Chang’s name recognition and its know-how to make a frozen Asian food line a hit.

To help convince workers that the frozen food tastes good, Chang’s CEO Rick Federico sent freebie coupons to employees to try the new items.

•Burger King. The chain recently teamed with the ConAgra Foods Lamb Weston division and rolled out King Krinkz seasoned crinkle-cut fries — cooked in the microwave — for $1.10. The focus is “to reach consumers through new channels” and give them “new ways to connect with the brand,” marketing chief John Schaufelberger says.

•Jamba Juice. The chain, with 750 units in 22 states, has a line of Frozen Fruit Sorbet & Yogurt bars made by Oregon Ice Cream. A box of four, 2.5-ounce bars costs $3.99. “The driver is to extend the Jamba brand and to let the consumer enjoy Jamba in more ways,” CEO James White says.

USA TODAY

Consumers Cut Back Visits at all Dayparts

 

 

Where Happy Meals are Illegal

Santa Clara County has passed a new law that deems it illegal to have free toys in Happy Meals. While some people feel that this is an important law to reduce childhood obesity, others are just downright angry.

Here are the two sides of the argument.

Against: At the hearing, franchise owners pleaded that more “government regulations” are not necessary. Additionally, some Santa Clara residents feel it is shameful to put a ban on the Happy Meals and the toys inside. Parents should be allowed to choose what their kids eat and little children should not be deprived of toys. Others say that there are healthy choices in the meals such as salads, apple slices and low fat milk. According to abcnews.go.com, overall, “87% of county residents opposed the bill. ”

For: Supporters point out “one in four children in the county are overweight or obese.” Indeed, it is no secret that many children in America are overweight. Ken Yeager, the bill’s sponsor says, “Breaking the link between unhealthy food and prizes” is important. In other words, people feel that children are lured into eating the fast food due to the prize they receive after eating it. After all, McDonalds is associated with fun and happy times for kids.

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Restaurant Chains Vow to Cut Sodium in NYC

Elissa  Elan writes at Nation’s Restaurant News that four restaurants chains, including Subway and Starbucks, were among 16 companies that pledged Monday to voluntarily cut down on the amount of sodium in their products as part of a national initiative aimed at reducing salt consumption by 25 percent over the next five years.

The companies, which also include Au Bon Pain and Uno Chicago Grill, are the first to make the voluntary pledge through the National Salt Reduction Initiative, a public-private partnership that New York City launched earlier this year. Eighteen health organizations and 29 cities, states and municipalities are now participating in the program.

“By working together over the past two years, we have been able to accomplish something many said was impossible: setting concrete, achievable goals for salt reduction,” New York Mayor Michael Bloomberg said in a statement. “The National Salt Reduction Initiative has the potential to save tens of thousands of lives that otherwise would be lost to cardiovascular disease in coming years.”

Monday’s announcement comes as the sodium debate heats up on a national scale. Last week, the Institute of Medicine issued a report recommending federal regulation of sodium content in prepared and restaurants foods. The National Restaurant Association, however, maintains that sodium reduction should be done on a voluntary basis. (EARLIER: Talk of sodium regulation boils over)

Other companies that pledged Monday to reduce sodium in their products include Boar’s Head, FreshDirect, Goya, Hain Celestial, Heinz, Kraft, LiDestri, Mars Food, McCain Foods, Red Gold, Unilever, and White Rose.

The companies each made pledges for specific categories. Starbucks, for example, is targeting the sodium content in its sandwiches and cookies, and Uno is working to cut sodium in a variety of menu items, such as pizza, hamburgers and chicken sandwiches. Click here to see a PDF of all the companies’ goals.

Subway, which is looking to reduce sodium in its sandwiches, said it was pleased to join the initiative.

“Reducing sodium in our food is a commitment we have made for our restaurants globally,” said Lanette Kovachi, the chain’s corporate dietitian. “We are proud to partner with the National Salt Reduction Initiative. It will provide an important barometer to help us measure the progress we are making.”

The NSRI currently monitors sodium levels in 62 categories of packaged goods and 25 categories of restaurant foods. The companies participating in the program will reduce sodium in 49 of the packaged food and 15 of the restaurant categories.

“Reducing salt intake has been a public health priority for decades,” said Thomas A. Farley, New York City’s health commissioner. “We can now say we are taking the first steps to achieve it. This was made possible because of agencies and organizations that have joined to make this a truly national initiative, and we especially thank this group of companies that are leading the food industry toward a healthier food supply.

“We look forward to expanding the industry’s participation in this public health effort,” he added.

The recommended daily limit for sodium intake is 1,500 milligrams for most adults and 2,300 milligrams for others. Medical experts contend that increased sodium levels in one’s diet can lead to high blood pressure, hypertension, heart attack and stroke.

 Read more:  Nation’s Restaurant News

Marketing Health Conscious

QSR Magazine reports that healthy eating is more top of mind for consumers now than ever before, and brands need to develop marketing strategies that display their healthy efforts. 

Quick-service operators have a tough task promoting themselves in a market where consumers are increasingly concerned with keeping to a balanced diet. This year began with new healthy eating–based marketing campaigns—a renewed interest in a trend that had taken a backseat to promoting price and value for a while.

While healthy eating is far from a new trend, the National Restaurant Association reports that 73 percent of adults say they try to eat healthier now at restaurants than they did two years ago. Furthermore, as eating out on the go becomes an ever-increasing part of consumers’ busy lifestyles, so too does quick service’s contribution to national health and, consequently, pressure on the sector increases.

Recent mandates for restaurants to post calorie content on menus could significantly change how consumers behave and consume, so it is important to figure out how to position and market a brand now before it becomes widespread. Furthermore, mothers will always remain key decision makers when eating out, and a healthier image could be the deal breaker when they decide which brand to eat at.

As such, we have seen healthy eating become a central part of marketing strategies, with key trends including improving brand transparency, not deviating too far from the core business, targeting the right consumer, and stepping up the use of endorsements to build trust.

With the publishing of calorific and nutritional information increasingly available, quick service has to factor this into company strategy. It is now actively directing consumers to healthier parts of the menu—Quiznos, for example, promotes 20 sandwiches under 500 calories—to avoid consumers giving up on fast food altogether.
Healthy eating is more top of mind for consumers now than ever before, and brands need to develop marketing strategies that display their healthy efforts. 

Read More at: QSR Magazine

A look at the fastest-growing chains

Mark  Brandau of Nation’s Restaurant News reports that the annual Technomic Top 500 report found that 2009 was a brutal year for the industry’s largest concepts, with aggregate systemwide sales for the largest chains falling 0.8 percent. Upstarts, however, including Five Guys, Noodles & Company and Potbelly Sandwich Works, were able to post double-digit increases in sales.

Data compiled by the Chicago-based consulting firm revealed that the 500 largest restaurant chains posted aggregate annual sales of $230 billion, down almost $2 billion from a year earlier. In 2008, aggregate systemwide sales for the group had increased 3.4 percent. Many concepts halted expansion plans and closed underperforming locations, resulting in an anemic 0.3-percent increase in unit growth, compared with 1.8 percent growth in 2008.

“As the U.S. economy remained in a recession, restaurant operators continued to face a host of challenges, including cost pressures followed by declines in consumer dining demand,” Ron Paul, president of Technomic, said in a statement. “The data in this report clearly supports what we’ve been hearing in our consumer research surveys over the past year.”

Paul told attendees at the annual UCLA Extension Restaurant Industry Conference last week that growing sales in 2010 likely would remain difficult as unemployment and underemployment are expected to stay near current levels for the rest of the year. [Earlier coverage: Recovery in 2010? Maybe not]

Technomic also found that the country’s 500 largest chains performed better abroad than in the United States. International sales for the Top 500 brands grew 3.3 percent in 2009, and international unit expansion was 5.2 percent.

While the top 500 chains struggled as a whole in 2009, certain brands and industry segments bucked the trend with growth in sales and locations.

The 10 fastest growing chains with 2009 sales over $200 million

Ranked by largest percentage sales increase with concept name; 2009 U.S. systemwide sales; % sales increase
•Five Guys Burgers and Fries; $453 million; 50%
•Tim Hortons; $446 million; 23%
•Buffalo Wild Wings Grill & Bar; $1,496 million; 22%
•Jimmy John’s Gourmet Sandwich Shop; $602 million; 21%
•Wingstop; $307 million; 20%
•Noodles & Company; $230 million; 15%
•BJ’s Restaurants & Brewhouse; $430 million; 14%
•Chipotle Mexican Grill; $1,517 million; 14%
•Firehouse Subs; $206 million; 10%
•Potbelly Sandwich Works; $246 million; 10%

Source: Technomic Inc.

Read more: Nation’s Restaurant News

Subway Commits to Cage-Free Eggs

QSR Magazine reports that the Humane Society of the United States (HSUS) scored a big victory this week when it announced a commitment from Subway to eventually use 100 percent cage-free eggs.

The commitment comes on the heels of Subway’s announcement that it will roll out a breakfast menu.

Matthew Prescott, corporate outreach director for the factory farming campaign at the HSUS, says there is no timetable yet on when Subway will reach 100 percent cage-free usage, but that the sandwich chain will start by using 4 percent.

“They’re starting with 4 percent cage-free eggs, which we can safely say will spare tens of thousands of birds from life inside a cage,” Prescott says. “When they reach 100 percent, it will put that figure in the hundreds of thousands.”

Other quick-serve chains have agreed to switch to using cage-free eggs, including Burger King, Wendy’s, and CKE Restaurants. Subway is the first to commit to using 100 percent cage-free eggs.

“It’s part of a growing trend of, not just companies starting to use cage-free eggs, which really started with Burger King in 2007 as far as major corporations go, but now we’re seeing this is a trend to do 100 percent,” Prescott says.

“Subway is the first [quick-serve] chain to commit to 100 percent, but in other sectors, just even over the last few weeks we’ve seen this.”

Read more at: QSR Magazine

‘Cereal Bowl’ Cafe Opens in D.C.’s Cleveland Park

ABC Channel 7 News Washington DC Reports that a new food fad could soon start filling up customers around in the Washington-area  as ‘The Cereal Bowl Cafe’ opens this weekend in Cleveland Park.

The new restaurant offers whatever customers are hungry for as long as it’s cereal-related.

Watch the video:

Residents Moira Smith and Lindsay Diokno were headed to the movies Friday and stopped in for a cup on their way.

“If you’re going to go out to a cereal restaurant, kinda-bar-place, you don’t want to get the simple kind (add) the fruit and it’s healthy. Go all out,” Diokno said.

“I think back in college when you had all the options I guess I kind of wanted to relive with out being like Jerry Seinfeld with all the boxes,” Smith said.

But ‘The Cereal Bowl Cafe’ is not just for breakfast. It also offers smoothies, coffee, parfaits and oatmeal treats.

Breakfast Competition Perks up as Sales Slow

Mark  Brandau reports at Nation’s Restaurant News that even though breakfast traffic has not fully recovered from declines brought on by high unemployment, new research shows that the morning meal is still an important daypart for restaurants.

Chicago-based research firm Mintel reported that restaurants added more than 460 new breakfast products to their menus in 2009, more than in the previous two years.

However, Mintel also found that consumers are spending less on the morning meal at restaurants. Half of consumers surveyed by Mintel last November said they spent less on restaurant breakfasts in 2009 than in 2008, while only 10 percent said they spent more. Nearly half of respondents said they don’t eat breakfast out during the week, at 47 percent, or during the weekend, at 45 percent.

A separate study by The NPD Group found that breakfast traffic fell 2 percent in the fourth quarter of 2009, compared with a 1-percent increase in the year-ago fourth quarter. Traffic at breakfast fared better than at other dayparts, the Port Washington, N.Y.-based firm found, as lunch traffic fell 3 percent and dinner traffic declined 4 percent in the fourth quarter of 2009.

Falling sales and traffic haven’t dissuaded restaurants from introducing new items for breakfast, however.

“We see an increasingly competitive market for restaurant breakfast, even though sales have declined,” said Eric Giandelone, director of research for Mintel Foodservice. “Restaurants are refreshing their breakfast menus, but I believe reduced consumer spending, as well as relatively high unemployment, will limit sales growth over the year.”

Sales of breakfast and brunch decreased 3.4 percent from 2007 to 2009, Mintel said. The firm projected that morning daypart sales would grow modestly through the end of 2011, but would pick up significantly after that, resulting in a 13-percent growth from 2009 to 2014.

“To overcome contracting sales, restaurant operators need to be keenly aware of what drives people into restaurants for breakfast,” Giandelone said, adding that survey respondents said they are seeking convenience and low prices during the weekday rush and menu variety and high-quality food while having breakfast or brunch on the weekends.

Already in 2010, quick-service heavyweights like McDonald’s and Hardee’s have rolled out new items in the morning, including the test of oatmeal for Oak Brook, Ill.-based McDonald’s and the introduction of the Double Sausage Egg ‘N’ Cheese Biscuit at St. Louis-based Hardee’s. Late last year, McDonald’s debuted its Breakfast Dollar Menu, comprising six items.

Coffee will be another area where restaurants will target improvement, as McDonald’s tests expanded items for its premium McCafe line of coffee and Miami-based Burger King upgrades its BK Joe coffee to Seattle’s Best.

Mintel said offering breakfast beyond morning hours could be a boon to restaurants, as the most popular suggestion survey respondents had for restaurants was all-day breakfast. Thirty-six percent of participants called for all-day breakfast on weekdays, while 38 percent wanted all-day breakfast on the weekend. Another 32 percent of respondents said they would like to see more breakfast value meals in restaurants.

Read more: Nation’s Restaurant News

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