Nation's Restaurant News - January 5, 2009

Philadelphia mayor signs
menu-labeling measure
Court dismisses CSPI’s trans fat suit against BK

PHILADELPHIA — Philadelphia Mayor Michael Nutter signed into law a bill that requires local units of chains with 15 or more stores nationwide to post calorie counts, fat content and other nutrition information on their menus beginning Jan. 1, 2010. The bill, which was passed in November by the Philadelphia City Council, goes further than a similar measure in New York City, which requires chain operators to post only calorie counts on their menus. Philadelphia’s new law requires operators to post on menus the amount of calories, trans fat, saturated fat, sodium and carbohydrates. Chain restaurants that use menu boards have to post calorie counts only, but must make the other information available to customers.

MIAMI — A District of Columbia Superior Court judge dismissed a lawsuit brought by the Center for Science in the Public Interest against Burger King Corp. urging the chain either to halt the use of artificial trans fats or post prominent warnings about the substance on menu boards. The court ruled in November that CSPI had no legal grounds for its lawsuit because the advocacy group had not met the requirement of representing someone who actually had been harmed by trans fats, which have been linked to heart disease. CSPI officials could not be reached for comment by press time.

CSPI filed the suit in May 2007, claiming that Burger King was the only top burger chain to retain use of partially hydrogenated frying oil. Both McDonald’s and Wendy’s had announced plans to eliminate the use of trans fats before CSPI filed the suit. In October 2008 BK said all of its U.S. and Canadian restaurants were cooking with trans-fat-free oil, and that by Nov. 1 its entire menu, including par-fried items, would be prepared with ingredients containing zero grams of trans fat.

Separately, BK debuted two conjoined mini burgers, as a limited-time offer, in at least one New York City store and in Southern New England after the elf-sized product has shown success abroad. At least one Burger King unit in Manhattan has been offering the BK Burger Shots, two broiled mini burgers for $1.49, which are also available in six-sandwich packs.

three 10-day periods, consumers would save nearly $20 billion. The U.S. Census Bureau says states’ sales tax rates run between 2. 9 percent to 7. 25 percent and add $236 billion annually to the total Americans pay for goods and services. The National

Council of Chain Restaurants is a division of the NRF.

gram would be reassessed and “come back stronger and positioned for success in the future.”

Separately, Jamba said Paul Coletta, its senior vice president, chief marketing and brand officer, will step down to pursue other interests. Coletta had been with the company since 2006. His roles will be assumed by existing management and team members.

Jamba suspends fledgling
retail beverage program
Boll Weevil chain closes 6
stores after Ch. 7 filing
NRF seeks to spur spending
with sales tax holidays

WASHINGTON — In an effort to help spur consumer spending at stores and restaurants in 2009, the Na-

tional Retail Federation asked President-elect Barack Obama to include a series of national sales tax holidays in his promised eco-nomic-stimulus package. The NRF requested in a letter that Obama speedily declare three tax holidays in March, July and October that

would last for 10 days each and encompass a wide range of purchases, including restaurant dining. Under the plan, the federal government would reimburse states for lost revenue.

The NRF estimates that by eliminating the sales tax for the

EMERYVILLE, CALIF. — Jamba Inc., parent to the 700-plus-unit Jamba Juice chain, said it suspended its ready-to-drink retail beverage products because of manufacturing and production issues. The drinks were introduced this summer in grocery and convenience stores under a partnership with Nestlé SA. The retail component, which the brand developed as an additional revenue stream, was deemed a success from the start. The company blamed the suspension on challenges with consistent manufacturing and inventory issues. Jamba indicated the pro-

SAN DIEGO — The ownership rights to the 42-year-old, family-owned Boll Weevil restaurant chain are unclear as the parent company filed for Chapter 7 bankruptcy liquidation in December and shuttered all six corporate units in Southern California. Four restaurants operated by the independent licensees of the brand remain open in the Southern California cities of Kearny Mesa, Lemon Grove, Imperial Beach and Ramona, and said they are not impacted by the liquidation. Licensee Jim Mann, owner of the Ramona location, said the rights to the Boll Weevil name will be handled by the court-appointed trustee in the case.

Friendly’s taps Lidvall for CEO post, tests Express fast-casual variant

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continued. “They used to do a really big takeout business in ice cream, so this really fits who they are and their core competency. So for them it makes a tremendous amount of sense.”

Knapp added that updating the Friendly’s brand could signal an attempt to reverse the company’s failing fortunes of the last few years.

“[The brand] had become stodgy, it didn’t sparkle,” he said. “Years ago it did — they were one of the lead players 25 years ago. So it’s a start, but to be a real player you need a little more change. It’s a promising start to being a real player; that’s a fair way to put it.”

He also said that by creating a

smaller footprint, the brand would be able to compete more aggressively for better real-estate opportunities.

“There are going to be a lot of opportunities in this economy [for restaurants] to get into much better real estate than they otherwise would be able to do,” Knapp said. “Maybe 8 percent of retail outlets are going to fail in 2009, which means landlords are going to be desperate to rent. It’s an ideal time for someone who has an ability to expand to get better quality sites at cheaper prices. Because [the Express stores are going to be] smaller sites … they can go into shopping strip sites because they won’t need as much space as their regular restaurants.”

Sullivan of Friendly’s said the new restaurants would sport a state-of-the-art design that includes “LCD flat-screen televisions, a merchandised display with ice cream and toppings [up front] and an entirely new menu board system.”

Sullivan also indicated that the new concept would be more cost-effective to operate because it requires less labor.

“We have eliminated some back-of-house positions, but we’ll have dedicated fountain, cashiers, food runners and production,” he said. “Based on the overall footprint, it’s a simplification of the business.”

He added that the company plans “within a three-to-five-year window to open up about

50 Express units a year” that are both company and franchisee operated.

Friendly’s, which was acquired by private-equity firm Sun Capital Partners Inc. in 2007 for $337.2 million, has recently undergone other operational changes, including the appointment last month of Lidvall. Before being purchased by Sun, Friendly’s had been targeted by activist investor Sardar Biglari, who had blasted the board for the company’s negative cash flow, high debt and languishing stock price. The company also had endured years of infighting between the board and one of the chain’s founders.

According to Knapp, Lidvall, who served as president and chief

executive of Rock Bottom Restaurants Inc. and was president and chief operating officer of On the Border Cafes, is an inspired choice to run Friendly’s.

“The new CEO is a very good guy, smart and good on strategy,” he said. “In fairness, some of this stuff was underway [before he started], but he gets it. He clearly understands what he has to do. He’s the new guy on the block, full of enthusiasm, and he has the full support of Sun. He did a really good job at Rock Bottom; they have a debt problem, but operationally and strategically, all of that worked really well. It’s a good pick in my judgment.” ■