Tag Archives: Restaurants

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Starbucks Unveils Bold, New Sustainability Commitment

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Starbucks announced a long-term plan Monday to give more to the environment than it takes, a part of which includes more plant-based items on the menu.

The company listed five strategies to become “resource positive” by 2030, with the first being the expansion of plant-based options and the move toward a more environmentally friendly menu. The objective comes a couple weeks after the regional introduction of the new non-dairy, plant-based Oatmilk Honey Latte that arrived in the Midwest.

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NYC set to ban cashless restaurants

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New York City is expected to pass legislation today that bans restaurants and other businesses from refusing to accept cash as a form of payment from customers. The measure is intended to prevent consumers who can’t afford a credit card or mobile phone to be effectively blocked from frequenting some establishments. Many of those places are fast-casual restaurants that have limited customers to payment via card, phone or tag because the transactions take less time. Cashiers are spared the seconds needed to count a cash payment and any change the customer is due. Advocates also contend that a no-cash policy better safeguards employees because there’s nothing for robbers to attempt to steal. The advantages have prompted operators such as Dos Toros, Sweetgreen, Shake Shack and Union Square Hospitality to eliminate cash payments at certain outlets. “While only a small percentage of restaurants have gone cashless for the operational and safety benefits, this ban will pose challenges to those businesses that will have to begin accepting cash,” Andrew Rigie, executive director of the New York City Hospitality Alliance, a trade group representing restaurants, taverns and clubs, said in a statement. He suggested that city officials should focus instead on helping more New Yorkers afford credit cards and other alternative payment options. “Technology is advancing and mobile payments are the way of the future,” Rigie said. The legislation protecting cash payments was introduced in the City Council by Council Member Ritchie Torres, a Democrat from the Bronx. It is widely expected to pass. Similar bans are already in effect in New Jersey, Massachusetts, Philadelphia and San Francisco.

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Is a Restaurant Recession Coming?

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The most recent American economic cycles have been defined by extremes: One with the Great Recession (the worst downturn since the Great Depression) and the other by way of the ongoing economic expansion, the longest ever in American history.

But restaurateurs know that this boom market can’t last forever. And already some indicators seem to portend a potential cool-down.

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Futurist sees big changes ahead for foodservice

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There are a lot of changes coming to the foodservice landscape, in no small part due to advancing technologies and changing consumer preferences. Ten years from now, there will be new ways to grow produce, source protein, prepare meals and even talk to customers. So what does that look like? Brian Frank, futurist and general partner with FTW Ventures, tells us where the future is headed. Brian Frank Do you see a change in where our food will come from?
I think how our food is grown or produced is going to change radically. And we look at everything from accelerating or improving traditional farming to modernizing farming or food creation. We look at things like: How are we going to create crops with less resources, less land? How are we going to provide transparent supply chains so people know where their products come from and can track them all the way back to the farm? And how can we ensure that that supply chain is safe and high-quality overall? Obviously different technologies are going to be applied. One area [where] we see a lot of opportunity is blending life sciences and traditional agriculture to make better products, or more products, for our foodservice operators. The other way is we see a lot of track-and-trace work being done, so [implementing] things like Internet of Things that can track the product when it is being grown into the field, all the way through the supply chain, and ultimately when it ends up on either the steam table or in the prep area of a foodservice operation. And this is to avoid things such as pathogen outbreaks, as well as track where there might’ve been adulteration back in the system, so that we can get bad food off our plates quicker without so much risk to the consumers. Any other major tech-based innovations you expect to have a big effect?
Software to plan and predict ordering so that foodservice operators can accurately predict their demand and their ordering plans, so we don’t have overages and underages. Because, as we know, food waste is one of the biggest things we’ve got to combat in the food system and in foodservice as well. Every product that doesn’t reach the plate is a dollar that that foodservice operator loses. And so how do we make sure that they waste less and have exact amounts of the ingredients that they need to have on hand? We see a lot of opportunity there. At the physical locations, we see technology playing a massive role as well. And again, using almost all of those same technologies, from life sciences, to hardware, to software and SAP, we see the ability to produce products easier, quicker, with higher output through utilizing technology. One that we’re obviously going to go into is automation, in terms of its role in helping us produce consistent high-quality product with a shrinking or challenged labor force. What impact do you think robotics will have on both foodservice and food production?
I think that there is a question of where it makes sense in terms of different types of retail and restaurant operations. … But I think the human touch will still be there. When we talk about robotics, we’re mainly looking at those high-throughput, consistent-products-at-a-reasonable-price-point kinds of foods. What I predict in the next three to five years is we will see more large-scale commissary kitchens that are automated. That’s the biggest question in my mind right now: Does automation have the biggest impact when it is automating existing food production, or are we going to see completely new food concepts built around automation, and those will displace the existing foodservice providers that are doing it in a more traditional way? What does that look like? I think when people hear “food factory,” they think large-scale, mass-produced foods using chemicals and things like that. As an industry, we’ve got to come up with a different term for that environment where people are going to be cooking a lot of products en masse, putting it in boxes that will then get delivered, or par-cooking it for foodservice and retail so that you don’t have to have large on-site kitchen operations for takeaway or delivery customers. That’s why I think we see a lot of movement in the virtual kitchen space. [They are solving] one part of the problem: Operators need spaces that are dedicated to cooking and that have no consumer-facing front end other than a delivery app or service. But I see those things becoming more automated over time. That’s the biggest question in my mind right now: Does automation have the biggest impact when it is automating existing food production, or are we going to see completely new food concepts built around automation, and those will displace the existing foodservice providers that are doing it in a more traditional way? How will that then make the workforce of the future look different?
It goes back to the, “Are you retrofitting, or are you new?” Let’s make an assumption that automation will have the biggest impact at all the new concepts, and the existing concepts will still need labor. They’re not going to automate as much. Someone from one of the big quick-service chains said to me, “We’ve already automated all of our processes where two people can run a whole store.” …That is the minimal. You need someone front-of-house selling to customers, and you need someone operating whatever equipment is behind the scenes. I think we are already at that stage where we’ve gotten to the minimum complement to run foodservice in quick service. The other guys that are not optimized are going to either figure out how to optimize their process by minimizing the use of lower-skilled labor, or they’re going to move to automation and move labor into a higher-value job. Going to (Union Square Hospitality Group CEO) Danny Meyer as the bellwether for this industry, he said, “Humans are really good at doing a lot of different things, and one of them is providing customer support and the engagement for the brand.” And you can’t divorce humans from that. In five years, it’s not a robot greeting me and taking me to a table and saying, “Hi. Would you like a sparkling water or still water?” There’s still some human there that’s on the front end. What about the back of house? It’s a question of who in the back is actually cooking the food and prepping the food. Is that a robot? Even one of my investments is in a dish-washing robot. Who’s cleaning the dishes? I think labor in those markets will tend to go away. The analogy I give is the car industry of the 1900s. When cars were first being produced, they were all handmade. The carriages were stitched, and we had all this labor. That labor that makes the cars has gone away, but the labor has gone into quality checking, managing the equipment, making sure the factories are optimized and run efficiently. And now it’s robots doing all the dangerous and hard tasks throughout that process. I don’t see a full 100% robotic-run environment for any brand. I still see a couple humans there. And the question is, “What’s their job and what’s their role?” It’s certainly on the quality and the customer experience. And then you have robots doing all of the rote work. In five years, it’s not a robot greeting me and taking me to a table and saying, “Hi. Would you like a sparkling water or still water?” There’s still some human there that’s on the front end. What about where we get our food? Do you think things such as 3D printing or any other technologies could gain popularity?
I do think there are a lot of technologies that are going to upend where our food comes from. The first one is our ability to take what the natural world is doing and convert it into a product that we know and love. Obviously, plant-based foods that simulate meat are a thing. Burger King and all the major chains have now acquiesced in some way and said, “We’re going to do it.” Taking vegetables and plants and converting them into something that we know and love, like a meat analogue or a meat substitute, is a massive, massive transformation from an eating perspective, but also from a “We have this very unsustainable protein obsession and we’ve got to satisfy it, and it may not be based on animal products going forward” standpoint. I think that’s one thing that we’re seeing a big transition to, and it’s already a multibillion-dollar market. The next market I see changing is the raw ingredient market. It’s actually becoming very, very interesting from a foodservice and retail perspective. CPG people were always experimenting with, “How can we create a better ingredient or a better stack to create our food from?” And that’s why I go back to Dan Barber (chef-owner of Blue Hill Farms) thinking about plant breeding and breeding plants or products specifically for traits that will benefit a foodservice operator. He bred squash that they’re using at Sweetgreen. And he now has a company that’s breeding plants that are better for certain functions, depending on what the foodservice operators need. So imagine a chef, instead of just going to the farmers market, saying, ” I need some onions. … I actually want to design a product using biosciences that will fit a specific need I have for texture, taste, quality.” And I think we actually have to do that. My example of that: If you eat a tomato today, a generic store-bought tomato for a really cheap price, there’s not a whole lot of nutritional value left in that tomato. It had been bred for shipping and transport rather than for nutritional quality. I know a lot of chefs that want to go back to the place where we have high nutritional quality in these fruits and vegetables. One of the ways you’re going to do that is by thinking about production a little differently. Whether you’re doing vertical farming near your facility so you get the freshest product at the highest nutritional quality, or you’re actually breeding them so that they retain or get back the nutritional content. So that is also very, very exciting from a supply chain perspective. Do you think that can become affordable?
I think it has to. I think it’s going to be become a requirement. … Otherwise, literally, the industry that’s feeding people is going to be killing them consistently, and I don’t think we want that. I see a beneficial future where everybody gets involved and says, “I want to stop dosing myself with sugar, salt and fats,” and they figure out how to make things tasty and delicious without requiring them. And plant breeding is not the only way to do it. I’m not going to reduce the sugar content of a sugar beet or a sweet potato, but I can supplant the sugar in those with other substances that act like sugar. If I’m [a soda company] and I’m trying to make a better beverage, but I want to use less sugar, how do I reformulate or refactor that using all that nature and science can give me? I’m not talking about aspartame or chemically derived products that are new and novel. I’m talking about finding things in nature that we can replicate more easily using science. And a good example of that is protein-based sweeteners that don’t trigger the glycemic response. And those just aren’t very plentiful in the world. They exist in very, very specific fruits, berries and nuts. And how do we extract those and then replicate those things that work in these very novel or interesting ways? Do we know yet if there’s a natural way to do that? This is the exciting thing. “Natural” is such a loaded term. In some of the cases of these protein-based sweeteners, it comes from a fruit (such as the miracle berry). You bite this fruit, and it coats your tongue, and everything that you taste that is supposed to be sour-tasting isn’t. It basically just tricks your receptors. And this has existed in the world forever. The berry is grown in Africa, and certain African cultures have been using it as a sweetener enhancement for their foods. We’re just taking this thing that is in small concentrations and grown [in very limited quantities] and expanding production of that. And our belief in the scientific community is there’s so many more compounds to discover that exist like that. How does this reach a wide audience, though?
I had a major nutrition company come to me and say, “I never want one of our scientists to say that I have to climb the high mountains of Himalayas to get some ingredients. That means that we don’t have enough of it, and it’s not going to be able to be produced reasonably so that we can get it to everybody on the planet.” And so, we look for things that have that opportunity of potential. We are big proponents of fermentation at our company. …Fermentation is a process using these amazing bacteria creatures, and all you have to do is train them to create something new and novel, and they can eat one substance and spit out another. One of my companies … had [trained the bacteria to] spit out collagen and gelatin. There’s another company that’s doing it with egg whites. There’s another company that’s doing it with casein. And the net end product you get, whether it be casein, or egg white proteins, or collagen, it is molecularly identical to the product we get from other ways. We have to understand the value of these sciences, and we have to leverage them to get the product that we need. And if the collagen that the company produces has been consumed or used for hundreds of thousands of years already, and the thing that we’re giving you is molecularly 100% the same exact thing, there is, in my mind, little to no risk of using that exact same product. And it is naturally derived from a natural process we understand. Now, when you start adding chemicals and you start creating things that didn’t exist in the world, that’s a different story. And when you get to the definition of GMO, when you’re actually splicing in other organisms into an existing organism to get something new, that’s a different story. But we now have the sophistication of science. Are there any technologies impacting this?
CRISPR is a very interesting science. When you talk about technologies that can have a massive impact on the world, CRISPR is going to have a massive impact not only on the world of food, but the world in general. CRISPR is what’s called a DNA scissor. Basically, you’re looking for parts of a DNA that you can snip out to retard or enhance certain features of a product. And we actually have the first CRISPR-derived product now on the food market. It’s an apple, and it browns less. Basically, if you’re a foodservice provider and you can hold your apples cut longer for your operation, that’s a huge benefit, right? We’re starting to see all these amazing scientific and technological breakthroughs that have an impact on the world. And I think there’s a dogmatic approach to the food world right now that is not productive to moving the food world forward and having a good discussion around what should and should not be allowed. What do you think needs to change?
When you look at our corn and soy industry, there’s a lot of genetic modification that’s already happened. So unless you’re literally cutting out corn and soy from your diet, you’re still going to eat something that’s been genetically modified, and it’s just a fact. I’m not trying to say it’s good or bad. I’m just saying that’s the facts. … I also think we should allow innovation to happen to explore. And I think if we don’t, then 30 years from now, when we do have major food shortages and we’re capped out of land resources, everybody’s going to be looking around for a massive solution immediately. And I’d rather start developing that now and give ourselves the opportunity to develop a solution than to really put ourselves in a bind 20 or 30 years from now when we have 10 billion people on the planet. We have that problem solved. We also need to up-level traditional agricultural practices and make them more efficient, make them cost less. Organic is a tax on the farmers and a tax on the consumer. It costs a lot for a farmer to move organic, but people want it. And so you have to negotiate that world too, and I think that has to get better just as much as we have to allow science to develop new opportunities for us to make more food, and better food. We’re starting to see all these amazing scientific and technological breakthroughs that have an impact on the world. I imagine this would have an impact on waste, but what about nutrition? I would assume if we’re making food that’s better, people down the line will eat better.
That’s my hope. That’s why I think we have to spend more time looking at the composition of food. I’ll go back to plant-based foods, because I think that’s a hot trend right now. What we get from a cow or from a pig or from a chicken is kind of fixed by what nature allowed that process to take. And obviously we’ve already done a lot to pigs, chickens and cows to kind of design them the way that we want them to come out. But at the end of the day, you’re left with a fat content, a protein content, a macro nutrient content that is pretty much fixed within a certain range for those products. If you want to get something different, then you actually have to think different. You have to ask differently. That’s why the Impossible Burger and Beyond Burger are really interesting—it’s not just one product. It’s a platform that you can continually iterate, whereas it’s very, very hard to iterate on a cow. Team Impossible built a burger that tastes good, tastes as close to beef as they can get it right now today, and they’ll keep improving it, and they’re making a sustainability argument that making what they make is cheaper [in terms of] the amount of land and resources that are being used. Now, everybody will come back and go, “But your burger isn’t healthier than a burger.” And I think what Pat (Brown, CEO of Impossible Foods) generally says is, “Well, if you’re going to eat a burger for its health reasons, you’re doing health wrong.” He has had tens, if not hundreds, of iterations of the burger before they released what they eventually released, and they’re continually experimenting to get to the next version that is healthier, that reduces sodium, that reduces fat. And he does all the right things with that. So what do products like this look like in the future?
I think the products that we’re going to be providing in the future will be a platform for us to deliver optimal nutrition. Now, this gets me into another big area of the future for me, which is not only should it be a platform that can provide the nutrition that people need, but it should also be customized for each individual consumer. I think in the institutional kitchen, they have to think a lot about, “I’ve got all these diabetics. I’ve got all these people that have these specific diseases that we have to treat.” So it can be a great medicine or help in helping relieve some specific issues. And obviously, we have to get out of a pattern of heart disease and diabetes in general, and so finding a contributor to getting people over that is huge. So when I’m walking into a Burger King or McDonald’s in the future, I really hope that they’re thinking about, “Hey, Brian, not only do you need to have an Impossible Burger because you want to save the planet, and think it is better for you because it includes plants, but we also want to give you these added nutritional elements on top of it, like a piece of kale, because that’s better for your body, specifically.” How much of that is on the consumer?
One of my friends just started using a continuous glucose monitor, and they’re watching what they eat and tracking their blood sugar against that. Previously, this has been only available to diabetics. But there could be someday where everybody has an Apple Watch that does the glucose monitoring on their wrist. So how do the foodservice guys, and the retail guys and institutional kitchens take advantage of that knowledge? How far out is that, that people have so much more knowledge about their own nutritional needs?
I think it’s very, very close. And I think that people are also subscribing to what I call these food communities or food tribes. People are already self-selecting, saying, “I’m paleo, I’m keto, I’m gluten-free,” and things like that. And now all that just has to be captured. There is a company that does it specifically for some of the retailers. It builds a front end so someone can build a customized retail experience online, and once the retailer knows that, of course they’re going to want to try and sell you more product and speak to that specific food tribe. And when they have special products or special incentives in that category, they’ll know who to go to, which, for most retailers and foodservice operators, has been a black box. McDonald’s recently bought a menu personalization company to do just that. I think we’re starting to see a first-generation technology take hold both in restaurant and retail. And, like I said, I think it’s already been there in some way in the institutional kitchens, because they have to think more discretely about who they’re servicing. That’s going to start to become a platform for people to do a lot of innovation on top of. What do all of these changes look like together, in practice, to alter the business?
I think that life sciences and biotechnology as a whole category, and (former Google CEO) Eric Schmidt said this, it’s like the internet. It’s going to be as big or bigger than the internet. [That’s because] once you understand how you can create products and improve products using biosciences, it’s going to unlock a huge opportunity for people to design things that meet specific consumer’s, or individual’s or company’s needs. We’re just at the very, very early stages of that. There are a bunch of people experimenting with that in the foodservice world. This whole eating for what we individually need, the personalized nutrition, [will have an impact]. But more broadly, how do we understand and collect information about consumers such that the brands and the operators can have that information themselves so they can make better decisions about who they reach out to? So I think customer engagement, direct consumer, as well as more discreteness. Loyalty in marketing will also go along with that. I think the days of putting coupons in flyers and sending them out to people is over. So what does the foodservice operation of the future look like?
I don’t think that there’s one concept to rule them all. … I promote a lot of omnichannel food. It’s funny. The retail industry in traditional retail has been doing this for years: Someone either wants to go into your store and pick up a product and handle [it], or they want to go online and never actually see it and just have it show up. Or they want to buy it at a local store because they need it sooner and they need it to show up today. I think that the food guys are starting to realize this. Like: “Look. I just need to meet the consumers where they’re at. I can’t have them always coming in. And so I need to figure out how to layer all these different types of services in an overall offering.”

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A look at recent alcoholic beverage consumption trends

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Global beverage consumption trends are evolving. In the U.S., researchers have found a deep connection between demographics and alcohol consumption.

While each country may show vast differences, here in the U.S., we can see differences between states and regions. Being the melting pot of cultures, we have people from all over the world living here, and their backgrounds have a lot to contribute to the numbers.

A recent study released by the University of California, Davis’ Department of Agricultural and Resource Economics states that socioeconomic and demographic variables play a role in these persistent spatial differences among groups.

They studied and applied four decades of annual national, state, and supermarket scanning data to reach their conclusions. While the U.S. leads in global alcohol consumption, the data is not consistent across the country. Some states display more per capita consumption than others and show different types of alcohol consumption.

Here’s a quick overview of the study across the last 40 years:

  • Market share of premium wines has grown
  • Shares of both spirits and wine rose at the expense of beer
  • U.S. market share of premium craft brewing has grown
  • Mass-produced, low-priced beer has fallen
  • Globally, traditional wine-consuming nations are shifting towards beer while beer-drinking countries are increasing their consumption of wine

So, what accounts for these differences?

In a world where prices are similar across the nation, trade barriers are diminishing, and markets are well-integrated, one would imagine that U.S. alcoholic consumption patterns would be more consistent. Along with prices and income, culture plays a major role in and beverage preferences.

Sustainability is a recurring theme across industries this year, and it’s no different in the wine industry. The wine world is invested in dealing with climate change.

To that effect, 2020 will see more experimentation and research in wine-producing regions aimed at the various ways of reducing resource use in wineries. When it comes to wine consumption, globally, consumers are moving towards higher-end rosés, “appassimento” wines from Italy, oaked Chardonnay wines, and “natural” and “low intervention” wines. We can also expect to find more vegan stickers on wine labels.

According to a KPMG report, craft beverages will continue to grow in 2020 and beyond. Along with craft beer, we will see more innovations in super-premium craft tequila and mezcal, ready-to-drink (RTD) cocktails, sparkling coffee and sparkling tea, small-batch whiskey, bourbons, gins, and nonalcoholic mixers across the globe.

The other major beverage trend is the world of CBD-infused drinks. CBD-infused beverages have significant growth potential. A growing number of consumers look at CBD as a functional ingredient with health benefits, though not all claims are backed by science.

To this end, functionality is the buzzword in 2020, and beverage manufacturers are using this opportunity to enhance their products with supplements and expand on the concept of drinks as medicine for preventive health benefits.

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The Future of Food Preparation

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The rise of innovation in restaurant technology has dramatically changed the way the future is being defined in all corners of the industry, including the way food will be handled and prepared. It’s not all about robotics replacing humans (although that is evolving into more of a reality every day). More broadly speaking, it’s about how food can be prepared in such a way that it’s as fresh and as clean as possible. From sustainable indoor farming to food safety training solutions that remove the element of human error, food prep over the next few years may see even more technologies deployed on a large scale. Food safety gets smarter Remember Google Glass, Google’s ill-fated attempt to sell computer-enabled eyeglasses to mass consumer audiences? That project may have failed as a consumer product, but it is still very much alive and well as the Glass Enterprise Edition, a product sold to businesses across a number of industries—including foodservice. Tom Chestnut, senior vice president of the global food division for NSF International, Ann Arbor, Mich., oversees a team that conducts hundreds of thousands of food safety audits across the foodservice industry on an annual basis. In 2014, he initiated conversations with Mountain View, Calif.-based Google about the potential of using the Glass product as a remote training tool for the industry. At first, Chestnut envisioned that instead of sending food safety auditors around the globe, NSF International would be able to send out pairs of Google Glass to foodservice managers and walk them through the auditing procedures remotely. Fast forward to today, and the scope of the potential applications of this technology has since expanded. It’s currently being piloted as a food safety training tool with a major franchised restaurant chain, and it could eventually make its way into kitchens across the country. “In food safety, it’s all about, ‘What if we had the ability to correct human error?’” Chestnut says. “If you look at the recalls that occur today—foodborne illnesses, somebody didn’t wash their hands correctly, somebody didn’t put gloves on before they were preparing food, someone put the wrong ingredient in and there was an allergen and it caused a recall—I mean, where we’re ultimately going with the technology over the course of the next 12 months is to have that ability to detect human error in real time. If an employee is wearing the device, going step by step through food preparation, and the glasses detect a deviation, it will correct them in real time.” The University of Arkansas Department of Food Science recently conducted a study with Google Glass and NSF International’s training software and found that, on average, participants who used the eyeglasses were able to learn and execute proper food handling techniques in half the amount of time as those who were trained with traditional videos. Plus, there’s no variance in the training, as opposed to having a manager walk each new employee through proper food handling techniques. Google just released an updated version of the Glass Enterprise Edition, and Chestnut says that his team will now be able to start piloting the technology with more restaurants and prepare for a wider release in the near future. Typically, a restaurant chain uses two pairs of Google Glass per location, and there are two pricing models for the device. The hardware itself ranges in cost from $1,200 to $1,400 and can be bought upfront, plus there’s a monthly subscription fee to use the software. Or operators can sign up for a two-year contract in which the fees are broken down and charged monthly over that time frame. Robotics as a service It’s hard to hit a trade-show floor these days without seeing some kind of robotic invention promising to reduce labor costs and streamline operations. But the field, for the most part, has always felt experimental and expensive. Seattle-based robotics company Picnic is aiming to change that by piloting a technology that automates assembled food preparation tailored to fit an individual operator’s business. In the future, this will mean automating any type of food made via an assembly line. The company is first focused on getting pizza prep right. The technology is up and running with a few pilot partners, including Zaucer Pizza in Seattle and the Seattle Mariners’ T-Mobile Park baseball stadium, says Picnic CEO Clayton Wood. A key component of this robotics solution is its ability to be outfitted for a wide range of ingredients and pie customization requests. “Right now, every pizza is custom—size, shape and toppings,” Wood says. “It’s not mass production. It’s really mass customization.” Wood declined to share how much the technology costs, but specified that the company does not charge any upfront fees for installation. Instead, a prospective client signs a contract that stipulates a monthly subscription fee. In this model, owners and operators get continuous access to software and hardware upgrades over time, and Picnic avoids asking for a steep capital investment right off the bat. “Our business model is what we call ‘robotics as a service,’ ” Wood says. He expects that the contracts will range from three to five years in length. With the pilot programs, Picnic delivers not just lower labor costs but also a much higher rate of consistency in the food that is prepared, which Wood says is the unexpected main benefit to operators so far. Picnic is made to fit with a variety of operators, but Wood says “the strongest economic case” for the company’s technology is the “ghost kitchen,” or the virtual kitchen, where delivery production demands are extremely high. “Operators are in enough pain that they’re really eager for new solutions, and I think the automation industry has been slow to provide solutions,” Wood says. “Very few companies are actually daring to handle food because it’s hard, and we expect that to continue to be hard. But I think the market really wants more solutions that help them with their problems.” In-house growing becomes a reality It’s no secret that diners are increasingly interested in tracing the supply chain of the food that ends up on their plate, whether it’s a slab of wagyu beef or a crisp pile of little gem lettuce. But what if that supply chain was so short that guests could have a front-row seat to the entire life cycle of their food? That’s the idea behind indoor vertical farms, which use technology to foolproof the growing process for a wide variety of leafy greens and herbs that a chef might not otherwise have access to in their freshest form. While vertical indoor farms have been around for a few years, they are starting to gain ground not just with chefs at fine-dining restaurants but also multiunit chains and corporate foodservice accounts. Jean-Paul Kyrillos, co-founder and chief revenue officer of one such technology, Farmshelf, says that the bookshelf-sized indoor farms have been a hit with kitchen staff and customers alike. It’s a visual representation to customers that the foodservice operation is sourcing the freshest ingredients possible, and it opens up the possibility for chefs to grow herbs and small greens that they can’t source elsewhere. A single Farmshelf unit costs $8,250 plus a monthly subscription fee of $125 to cover the cost of seeds and the remote monitoring service that the company provides to support the plants as they grow. Chef Jose Andres has indoor farm units installed in his new food hall in New York City, Mercado Little Spain. Andres uses them in part to harvest viola, a delicate flowering herb that doesn’t travel well and normally cannot be grown year-round. Fellow well-known chef Marcus Samuelsson installed units at Red Rooster, his restaurant in Harlem, and grows and harvests tangerine gem, or Mexican marigold, which shows up in both cocktails and crudo. Better-for-you pizza chain Oath Pizza uses a unit to grow all of the basil used in one of the chain’s New York City locations. It’s not just the ability to have greens grown in-house that’s resonating with different types of foodservice operations, it’s also the access to lesser-known ingredients. Through vertical farms and groups such as Crop Trust, the international organization that protects and cultivates the Global Seed Vault, restaurants have access to unique produce as these groups look to promote crop diversity by sourcing unfamiliar seed varieties. Fast-casual chain Tender Greens is one such customer; in its vertical farm, the company grows amaranth, a leafy green that isn’t widely known as an edible plant. “We’re trying to get people to recognize that there are other foods out there,” Kyrillos says. “It’s kind of like trying to find [the next kale]. What else have we forgotten about?”

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Burgerim franchisees pick up the pieces

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This is part two of three in a series about Burgerim. Read part one here. Jeffrey Russell was laid off from his job as a senior credit specialist at Tesla two years ago. He had a house, some money in the bank and a determination to never have the feeling of being laid off again. He looked into franchising and came across Burgerim, ultimately buying a location in Glendale, Calif. Six months later, Russell is homeless. “I sold my house,” he said. “I sold my house,” he repeated, almost as if he couldn’t believe so himself. “I sold everything. I don’t have an apartment. I’m staying on my sister’s couch.” Burgerim signed up hundreds of people like Russell, who had little experience but some money in the bank. These franchisees bought into an idea: They could live the American dream and be their own boss. Photograph of Jeffrey Russell by Christina Gandolfo We spoke with more than 20 franchisees in all. They were nurses, professionals, accountants, cooks, engineers and educators. They planned their franchises as investments, hoping to put hard work into owning their own business, something they could leave for their children. These franchisees bought into Burgerim’s emotional pitches and promises of a low initial investment and strong profitability. Instead, they got a nightmare—one made even worse when the company went dark for more than six weeks around Thanksgiving. They serve as a brutal reminder that, in the days of asset-light business models, it’s the franchisee that bears all the risk. “The franchisee is the small guy,” said Robert Jameson, who was able to get out from under his location before it was built—but still was out $65,000 of his own money, including the $50,000 franchise fee and $15,000 for the architect. “But they’re the ones who take on all of the risk. They have all of the contracts. And when something like this happens, they’re the ones left with the aftermath.” These franchisees detailed their experiences, all hoping to prevent this from happening to others. Here are some of their stories. Emptied accounts Justin Carter had built up a bit of savings and was looking for a long-term franchise when he saw an ad for Burgerim on Instagram just over a year ago. The ad was interesting: The social influencer Foodgod had a deal to promote Burgerim. And the chain was growing. “It just seemed like a franchise that was on the rise,” Carter said. “How can a burger franchise go wrong? America loves their burgers.” He called the company. They quickly talked him into signing two franchise agreements for $80,000, rather than one for $50,000. He was also told they had a location in downtown Las Vegas ready to go. So he and his mother came up with the $80,000 for the franchise fee. Yet that Vegas location turned out to be unavailable. “There was nothing,” he said. After months of struggling to find a different location, Carter asked for his money back. He had another reason for the request: His father had been diagnosed with brain cancer, and his mother needed that money immediately. Burgerim, unlike many other franchises, told operators they could get their fees back if they couldn’t find a location after six months. The company agreed to cancel Carter’s franchise agreement and refund the fee in six months. But despite numerous calls to headquarters, the Carters still haven’t been paid. They are one of dozens or more operators who were promised refunds only to have those promises broken. We spoke with a half-dozen such operators, some of whom, like the Carters, had little money available beyond those savings. “I guess I was gullible in this situation,” Carter said. “I’m glad we didn’t find a location. Then we’d have to pay loans, and for me it’s a lot of money. I don’t have a lot of money. That was savings.” Deep in debt, even without a store Alex Damas just wanted a family business, something that would give his mom a job and something he could potentially leave for his two daughters. Burgerim seemed like a good idea. Damas had a franchising background, and his mother knew how to run a restaurant. “Between her and I, we would make that happen,” Damas said. “She had the experience. We thought this was a good deal to get it going for her.” Damas invested his own money and took out loans, sinking nearly $500,000 to open a location in Hallandale Beach, Fla. His location was 90% complete and getting ready for a soft open late last year. And then Damas was evicted. Burgerim, he said, was apparently on the hook for past-due rent at the location. “All of a sudden they stopped paying, and [the landlord] got no response and no calls.” He took out personal loans to fund the business after being told he couldn’t get a Small Business Association loan. Damas kept his job and is repaying his loans, hoping for things to get better. “I’m working with the different loan companies offering some kind of a reasonable payback plan until I see light at the end of the tunnel,” he said. “I’m just working, paying every little bit I can back.” Longtime dream dashed in months Steve Sloney opened his Burgerim in the shadow of corporate office buildings in Bingham Farms, Mich., in December 2018. The following February, he was named the company’s operator of the month. Sloney was, in fact, made for this. He’s a chef and his wife an accountant. They’d been thinking of starting their own restaurant for 20 years but ultimately decided to open a Burgerim franchise. “If we can’t do it,” he said, “nobody would be able to do it.” Sloney had some doubts, to be sure. The sales pressure in particular was intense. Yet he bought into the company’s promises of high volumes and profitability. And like others, he really wanted his own restaurant. “I was worried,” he said. “But not worried enough.” Sloney was directed to a loan broker, who engineered a complex series of 17 smaller loans to fund the business, which proved to be expensive and required him to start making payments immediately. But he was able to build the store for around $400,000 and open within a few months. His experience helped him run the kitchen effectively. Yet his store couldn’t generate strong enough sales. Food and labor costs were simply too high. “I knew each month exactly what I needed to bring in,” he said. “My break-even point was $15,000 a week. Instead I got $10,000 to $12,000.” He continued, “That’s only a $3,000 difference. If I broke it down to seven days, that’s just $350 a day, only 20 to 30 more people a day, and then I would have broke even. I was very close. I just couldn’t do it.” Seven months later, Sloney burned through his working capital and shut his doors. That dream lasted just a few months. He admits he was in a bad place in the aftermath of the closure. “It affects the whole family,” Sloney said. “It affects everybody, your friends, your family, your workers.” Photograph courtesy of Steve Sloney Imminent bankruptcy Marc Genece’s entrepreneurial career lasted 10 months. Genece spent years working for Panera Bread and enjoyed the restaurant business. But he’d grown tired of the corporate world and decided to give franchising a try. Genece had some money in the bank, an inheritance from his father. He signed up with Burgerim in 2017, flew out to California, met with the owner, Oren Loni, and visited a location in Hollywood. “They made a lot of promises,” Genece said. For example, the company told him construction would take three to six months and that he’d be profitable immediately. Genece used his savings to fund his South Florida restaurant. Construction took much longer than expected before his store opened in July 2018. The lease was $11,000 a month, nearly twice what even some former company executives believe is workable. Food costs also proved to be high along with labor costs. The restaurant had a good first day and then struggled thereafter, generating about $40,000 in sales a month, or less than $500,000 annualized. “We were running negative from the first day,” Genece said. His store closed 10 months after it opened. Like many operators, he sunk money into the business to get it going. Already out his $350,000 initial investment, he took out another $100,000 in loans. But, unable to pay the rent, his landlord ultimately evicted the restaurant and shut it down. He has a job today but will likely have to file for bankruptcy protection. “I took a big hit,” he said. “All of our savings, everything.” “Now it’s something I can talk about,” he added. “But before, I was just lost.” Cross-country move with a lack of support Kenneth Laskin figured he had the right franchise this time. Sure, he’d heard of Loni’s problems with other concepts back in Israel, where Laskin has family. But Burgerim had great food and a unique idea, and Laskin had some experience: He was a Quiznos operator more than a decade ago. He opened a unit of the sandwich chain in 2002, did great for a few years and then closed in 2007, after Quiznos added a bunch of franchises in his market, some less than a mile from his store. This time, Laskin wanted a location where nobody else would open, so he decided to develop a unit in Eugene, Ore., which happened to be on the other side of the country from his New York City-area home. “I thought we’d be a little protected,” he said. “We’d be the only one around.” Laskin opened his Burgerim in October, and “it went really well.” But business tapered in December, when he generated only $42,000 in revenue, and it slowed further in January. He figured sales would decline, and thus, he planned a grand opening for this month. But that plan was decided “before all this nonsense,” when Loni left the country and the company virtually shut down for several weeks. Then the marketing people he’d been working with on his grand opening “just disappeared off the face of the earth.” “There was just nobody there,” Laskin said. “Everybody’s email bounced back, and everybody’s phone numbers stopped working.” Laskin’s restaurant has lost money from the get-go. He borrowed “a couple hundred thousand” against his home and took out equipment loans to get the restaurant started. These days he’s working on his own to keep it going. He’s improved service times from more than 30 minutes to eight or nine. And he and his wife are working on the menu. After seeing poor Yelp reviews, he upgraded the burger buns. And they’ve already started buying food from local suppliers after distributor US Foods ran out of Burgerim’s proprietary food. Fortunately, Laskin loves Eugene, and he’s getting help from locals to stay open. “I have some people helping me,” Laskin said. “I have a local city councilman who likes Burgerim and wants us to survive. He offered to hold a rally for himself here. We’ll tie it with the grand opening. We’re just trying to come up with ideas.” He plans to keep the brand name as long as it still works. “I don’t have money for new signs,” he said. Stuck, despite a new plan Phil Schreuders had a plan. He had a pair of investors and a concept idea that would have turned his Burgerim location in Burbank, Calif., into a local restaurant aimed at tourists. The restaurant would have been named Back Story, a play on the area’s movie studios. That plan was supposed to save Schreuders’ restaurant career. Previously, he and his wife wanted to open a wine bar, but came across the Burgerim franchise and thought its bar component would work well. Schreuders opened his restaurant last April, having sunk more than $550,000 into its construction—$200,000 more than he expected—and pumped tens of thousands more into keeping it going. And then he ran into all sorts of trouble once it opened. He shifted to table service, because the model proved too difficult to get food prepared quickly. His rent and loans were costly. Food and labor costs were too high. Worse, his liquor license was delayed due to local politics, which cost his restaurant important revenue. Schreuders says he lost $34,000 a month on his restaurant. He received a bridge loan to help fund the business. He used personal credit cards. And then he sold his house to pay off the credit cards and that bridge loan, with the hope of refinancing his debt into a more manageable Small Business Association loan—only to be told he needed a house as collateral. The rebranding would have worked, but Schreuders’ landlord wanted Burgerim to release him from the franchise agreement. But the company never did, having shut down after Thanksgiving. On Dec. 19, after running out of money to put back into the business and just eight months after opening, Schreuders closed the restaurant. Five days later, he would have been able to start serving alcohol. He’d sunk everything into it. “Everything was used to try to keep this thing afloat,” he said. “Big lump sums of our personal cash were moved over to make payroll. Not one dime went my way.” Schreuders was speaking from his old restaurant, having just cleaned it to get it ready for the landlord. An auction company had just removed his equipment, which will be sold to help pay off the debts. He and his wife filed for personal bankruptcy. “It feels like I just opened the place,” he said. “It looks brand new. I’m sitting in here, in an empty room. It’s a little depressing.”

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Sustainable packaging gets priority

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Pressures from state and local governments, eco-conscious consumers and global environmental groups are forcing the packaging industry to become more sustainable. Plastic and foam polystyrene are the most obvious culprits of environmental harm, but not the only ones. In the short term, switching to recyclable and compostable materials is the path many restaurants and retail outlets are following, and tech advances are providing more varied and affordable options. At the same time, restaurant delivery and subscription meal kit services are increasing the need for single-use packaging. “The shift is coming, but in different ways,” says Natha Dempsey, president of the Food Packaging Institute (FPI), the “materials-neutral” trade association for the foodservice industry. “Economics plays into the choice, but performance and appearance matter to operators too. Packaging today is a complex and evolving landscape.” A question of balance Ever since Dos Toros Taqueria launched 10 years ago, the fast casual has made a conscious choice to source sustainable packaging, but “aesthetics and performance have to match those attributes,” says co-founder Leo Kremer. Bowls, plates, cups, bags and more are all compostable, but now that takeout and delivery are a much bigger part of the business, the containers have to hold up in transit, he says. “We’d like everything to be rapidly biodegradable, but they can’t start to compost in real time.” For Dos Toros, there’s a delicate balance between sustainability and durability, but Kremer says that compostables are continually improving. Right now, he purchases bioplastic forks and compostable plant fiber bowls with tight-fitting recyclable plastic lids, but the extra step of disposing the bowl and lid in separate containers can hinder sustainability efforts. Newer on the market are compostable, molded fiber clamshell containers with attached leak-proof lids that would solve that problem. Increased demand is making these more expensive in the short term, says Kremer, but as production volume increases, price will go down. “Operators should not get complacent about materials but actively review what they’re using every year,” he says. “Simply reducing the weight of the materials used in a container can have a massive impact on degradation rates without sacrificing performance.” Weighing cost and commitment Dempsey agrees that innovations in paper and molded fiber packaging are making compostable products much more durable and leak-proof. “Through advanced technology and materials science, we are able to offer molded fiber packaging with the performance characteristics of plastic but at a lower cost when manufactured at scale,” says Alex Garden, CEO of Zume Inc. Zume’s round pizza box, made of 100% sustainable sugarcane fiber sourced from agricultural waste, is now in test at Pizza Hut locations. Not only is it better for the environment but the rounded design also enhances food quality and texture, he says. The company is also leveraging technology to create custom food packaging designs, including cups, bowls, plates, utensils, trays and more. All are compostable, so after use, they can be used to produce biomatter and soil to put back into the food system. Unlike recyclable plastic containers, they do not have to be washed—food scraps compost along with the packaging. And unlike polystyrene, “we’re now in the advent of a time where, due to technology, there is no longer a trade-off between performance, cost and sustainability,” Garden says. Historically, the cheapest molded packaging, traditionally used for clamshells, cups and takeout boxes, has been made from polystyrene—a top producer of hazardous waste. Greener choices evolved, with molded fiber packaging made from paper, wood and wheat straw gaining traction. But now cutting-edge manufacturers are moving on to sugar cane, bamboo and palm leaves as more sustainable choices. “The traditional hot cup was made from wood fiber with a petroleum-based liner, but cutting down trees causes environmental problems,” says Mark Marinozzi, vice president of marketing for World Centric, a manufacturer of compostable and biodegradable products. World Centric now uses a combination of sugar cane and bamboo fibers to mold its cups, lining them with plant-based bioplastic. “These cups are really good at retaining heat and are very close in price to less sustainable ones, almost 1 to 1,” says Marinozzi. When a chain as large as Pizza Hut gets on board, it creates economy of scale for sustainable packaging and servingware. That bodes well for the future because cost has been a roadblock for operators. Operators including Dos Toros are saying that prices have stabilized, and some have even decreased for older compostables, but newer packaging innovations are always pricier when introduced. “We’re now in the advent of a time where, due to technology, there is no longer a trade-off between performance, cost and sustainability.” —Alex Garden, Zume Inc. Eliminating excess Austin, Texas-based Snap Kitchen, which produces healthy prepared meals for both at-home subscription delivery and supermarket grab-and-go cases, switched from plastic to compostable corn-based fiber containers about a year ago. Lids are recyclable plastic to assure a tight seal, but advances in molded fiber packaging may provide a more convenient and sustainable option. Photograph courtesy of Snap Kitchen But a big challenge remains: what to do with all the excess packaging that comes when a week of dinners or meal kits are delivered to a customer’s home. “The key is making sure all elements are either consumable or biodegradable,” says Snap CEO Jon Carter. “Sustainability is core to our mission, and we’re finding partners who can execute against that mandate.” Carter is paying close attention to the tech innovation around producing more sustainable cardboard cartons. But Snap is also exploring low-tech solutions, including using frozen blocks of food as the cooling medium instead of nonrecyclable insulation and chemical ice packs. Photograph courtesy of Snap Kitchen Also going in a lower-tech direction is noncommercial foodservice operator Christine Marcus, co-founder and CEO of Alchemista, which counts companies such as TripAdvisor and Accenture among its B&I clients. It has operations in Boston, New York and Washington, D.C., each with its own commissary. While Alchemista does use compostables made of palm leaves and sugar cane for her EnRoute grab-and-go business, Marcus says she believes that reusables are the next iteration in corporate dining. Alchemista delivers the meals and servingware to each location, including plates, utensils and glasses, and provides bins for the dirty dishes. Employees then cart them back to the commissaries to wash and reuse them. Alchemista is a premium foodservice provider, and the company’s corporate clients are willing to pay more for labor and other costs incurred with reusables, says Marcus. “Both food presentation and reducing the carbon footprint are priorities, and they feel the extra cost is worth it,” she says. “We’re not just switching materials, we’re rethinking the whole supply chain.” Sometimes the lowest-hanging fruit is not new technology—it can be as simple as a sturdy reusable plate or a brown paper bag, she says. Where do we go from here? Currently, there are 370 unique bills in more than 40 states legislating against plastics and other environmentally harmful packaging materials, says Marinozzi. And 2020 will no doubt bring more. “Operators may not have a choice anymore. They may get fined if they’re not in compliance,” he says. In addition, as their competitors go green, operators will have to follow suit or lose customers. There’s a groundswell of support for sustainable packaging—especially among the younger generations, Marinozzi says. “Retail is ahead of foodservice because restaurants are reluctant to pass on the added cost of sustainable packaging to customers,” says Ray Hatch, CEO of Quest Resource Management Group. “This will change five years down the road, as consumers [led by environmentally minded Gen Zers] will be more apt to pay a little more for a meal that comes in sustainable packaging.” He and others are suggesting operators add a 2% packaging surcharge to the price of a menu item. “There will be more changes in packaging in the next 10 years than have occurred in the last 50,” says Dempsey of FPI. Startup companies are exploring and manufacturing on a small scale disposables made of cassava, mushrooms and seaweed—all materials that degrade more rapidly and can be scaled up for production. The creator of the mushroom packaging, which is made from mycelium and the agricultural byproduct of hemp, claims it’s cost-competitive with conventional foam packaging. On the grocery side, food and beverages packaged as edible pods and capsules are already in development for coffee, and boxes that start to degrade along with the pasta or rice inside are realities, says Hatch. “These kinds of packaging will be commonplace in five years,” predicts Marinozzi. “They will be second nature, much like electric cars.”

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Are You Doing Enough with Your Restaurant Data?

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Between your POS system, your forecasting/scheduling software, your inventory management system, and every other system you have, you’re collecting data on just about everything that goes on in your restaurant. Maybe you even have some insight into the data of your competitors. Here’s the problem: you have all kinds of data, but not many insights. If you’re not making business decisions based on the data you collect, what good is that data? Here’s how you can use the tools at your disposal to create actionable insights for your business.

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Why struggling chains turn to franchising

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This week, the burger chain Krystal filed for federal bankruptcy protection, revealing that it has closed 44 locations in recent months. The filing came just three months after the Chattanooga, Tenn.-based chain said it planned to sell as many as 150 company stores to franchisees. Sometimes, those refranchising deals came along with requirements that the operator remodel the location. That refranchising effort followed multiple defaults on financial covenants in its loans. Krystal is hardly the only chain that turned to refranchising as part of a financial rescue strategy. Steak ‘n Shake, another burger chain, said it planned to sell all of its company-run locations to franchisees. It then proceeded to close a quarter of those 400 locations, saying these locations were being prepared for that refranchising deal when in reality the restaurants were simply losing money. Refranchising is clearly a popular strategy among all sorts of legacy restaurant companies. Franchising an established restaurant chain is more profitable than selling burgers or chicken sandwiches. Franchisors don’t have near the capital expenses. They don’t have to employ low-skilled, high-turnover employees. If a restaurant goes under, they’re just out the 5% or 6% royalty payment rather than 100% of the location’s revenues. Franchisees have frequently proven their ability to run restaurants better than their corporate counterparts. And if you can’t operate the restaurants, why not sell them to someone else to see if they can? The issue for many franchises is money. Many of these brands require investment to get sales back up. And they can’t afford it. So they seek to spread out the cost of that investment to a larger number of franchisees. When it works well, franchisees will eagerly buy the restaurants and build empires. Greg Flynn, who operates the largest restaurant franchisee in the country in Flynn Restaurant Group, turned that company into a massive operation at first by acquiring corporate stores from Applebee’s. At the same time, it seems disingenuous to turn over a money-losing concept to franchisees. Steak ‘n Shake and Krystal are different examples—the former didn’t file for bankruptcy and the latter didn’t close restaurants it expected to sell. But both were in need of some drastic action. As we learned with the Burgerim disaster this week, franchisees take on all the risk. They’re the ones putting up the money to buy the restaurants, after all. And they’re the ones hit with capital cost requirements, potentially high fees for delivery orders and demands for costly get-customers-in-the-door discounts. Both Krystal and Steak ‘n Shake have used some heavy discounts to get customers in the door. In Steak ‘n Shake’s example, in particular, the company became heavily reliant on those discounts for customers. When customers turned elsewhere, its same-store sales and traffic both plunged. Why would franchisees be able to do any better in that scenario? And franchising is hardly a panacea, anyway. It simply shifts the risk from one corporate entity to the other. Jack in the Box, for instance, has spent years selling stores to franchisees. Many of those franchisees are losing money and the company is embroiled in a dispute with those operators. Its CEO is now leaving after engineering a major overhaul of its corporate operations.

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