Nation's Restaurant News - April 27, 2009

Burger King to alter
Texican Whopper ads

MIAMI — Burger King Corp. said it would revise ads for its Texican Whopper in Spain and the United Kingdom after Mexico’s ambassador to Spain objected to what he called a “stereotyped image.” The BK Texican Whopper television ad features a small wrestler dressed in a red, white and green — the colors of the Mexican flag — hood and cape teaming up with a Texas-inspired cowboy twice his height.

In other news, the company said traffic in foreign markets dipped sharply in March, impact-

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ing its third-quarter sales. BK expects revenue in the March 31- ended quarter to be $600 million, up about 1 percent from $594 million in the same period last year. It expected third-quarter earnings to be 33 cents to 35 cents a share, which meets analysts’ targets. Systemwide same-store sales rose 1 percent in the third quarter, but margins in Germany and Mexico were weak on lower traffic. Same-store sales in the United States and Canada rose 1.6 percent.

Red Mango offers to buy
back franchise flops

DALLAS — Red Mango, the 45-unit frozen yogurt chain, said it will buy back a store for up to $275,000 if a franchisee is dissatisfied within six months of opening. The chain’s “Red’s Real Deal” program

also lowers the initial $35,000 fee by $10,000 for franchisees who sign new agreements in 2009 and provides an additional $10,000 to the franchised location for local-store marketing. Founded in South Korea in 2002, Red Mango has units in California, Hawaii, Illinois, Nevada, New Jersey, New York, Utah and Washington.

Charlie Brown’s parent
names Borgese CEO

MOUNTAINSIDE, N.J. — CB Holding Corp., parent of Charlie Brown’s Steakhouse, Bugaboo Creek Steak House and other brands, named Sam Borgese president and chief

executive. Borgese will be charged with leading the executive team in implementing the strategy necessary to manage and grow the company’s brands. Borgese served previously as president and chief executive of Catalina Restaurant Group, the San Diego-based parent of the Coco’s Restaurant & Bakery and Carrows brands.

Feds: Efforts to improve
food safety have stalled

ATLANTA — Efforts to better protect consumers from dangerous foodborne pathogens, including E. coli O157:H7 and salmonella, “have reached a plateau,” Dr. Robert Tauxe of the U.S. Centers for Disease Control and Prevention said. The estimated incidence of infections from targeted pathogens in 2008 showed no significant change compared with the prior three years, a report referenced by Tauxe noted. The continued “education of restaurant workers and consumers about [pathogen] risks and prevention measures” was cited as a possible means to reduce infection rates in that report, which is published annually by the Foodborne Diseases Active Surveillance Network. The network is a collaborative project of Atlanta-based CDC, the U.S. Department of Agriculture’s Food Safety and Inspection Service, the Food and Drug Administration, and sites in 10 states.

keting executive with Yum! Brands Inc., will be responsible for store branding and concept development, including advertising, merchandising, promotion and innovation. In addition, he will assume responsibility for the bagel company’s information technology department as well as restaurant development and real estate.

Buffets to exit Chapter 11 bankruptcy

Egan, Minn. — Buffets Holdings Inc. said it had received court approval for its reorganization plans and expects to emerge soon from its Chapter 11 bankruptcy proceedings. Buffets, the parent of 536 restaurants operating under the brands Old Country Buffet, Country Buffet, Hometown Buffet, Ryan’s, Fire Mountain Grill and Tahoe Joe’s, filed for Chapter 11 protection in January. It had struggled with decreasing sales and a large debt burden from the $876 million acquisition of the Ryan’s chain in 2006. The company said it received commitments for up to $117.5 million in new, first-lien exit financing from various lenders, which will enable the company to satisfy its bankruptcy obligations and provide working capital for ongoing operations. In addition, $139.8 million in second-lien rollover financing will remain with pre-petition lenders, the company noted.

Buffets also plans to debut a new prototype for its Old Country Buffet chain in Colorado Springs, Colo., this summer. The new design includes a display grill, an exhibition-style cooking station, a market-theme interior, a streetscape and serving areas separated into cultural cuisines as well as food groups. For example, it will contain a bakery, salad bar, and Italian and Mexican food stations.

Chili’s kicks off new
‘ 10 under $7’ promos

DALLAS — Chili’s Grill & Bar has launched a two-pronged marketing attack with a new “ 10 under $7” value message and a TV ad campaign that skewers its casual-dining competition as bland and boring. Among Chili’s $7 options are its Oldtimer burger, a half order of quesadillas with a small salad, a half portion Monterey Chicken with a side, and two chicken tacos with a salad. Chili’s kicked off the promotion with an advertising campaign that highlights Chili’s more flavorful offerings compared with a fictitious chain named P.J. Bland’s, featuring cardboard food and a washed-out decor.

to challenging refinancings, defaults or possible bankruptcies. “The combination of a challenging operating environment and difficult credit conditions will raise borrowing costs for most restaurant companies,” said the latest Fitch Ratings U.S. Restaurants and Foodservice report.

Fitch said it does not anticipate a sustainable turnaround for the restaurant industry in 2009.

Most recently, restaurant companies including Ruby Tuesday, Brinker International, Landry’s Restaurants, Ruth’s Chris Hospitality and Wendy’s/Arby’s Group have undertaken debt and credit restructurings. While they each were able to amend credit facilities, the cost of capital increased and the agreements between lender and borrower became more restrictive.

Pollo Tropical unveils
steak meal for $6.99

MIAMI — Florida units of the Pollo Tropical chain is offering a “ Chur-rasco Steak” meal for $6.99. The grilled, Latin-style steak will be served with a choice of two sides, such as black beans, balsamic tomatoes, white rice, sweet-kernel corn, yellow rice with vegetables, boiled yuca, curly fries or Caesar salad. Pollo Tropical, a division of Syracuse, N.Y.-based Carrolls Corp., said the marinated steak is accompanied by chimichurri, an olive oil-based sauce that includes onions, cilantro, pepper, and a variety of herbs and spices. The suggested price for the steak alone is $5.99. With a side of rice and beans, the price is $6.39. The steak will be offered at Pollo Tropical’s 85 Florida stores.

Credit woes continue for
restaurant companies

NE W YORK — Weakened credit profiles and the sustained U.S. recession continue to make access to capital difficult and more expensive for restaurant companies, a report from Fitch Ratings said. Those companies with maturing credit facilities or those with high levels of debt are most susceptible

Einstein Noah names
new chief concept officer

LAKE WOOD, COLO. — Einstein Noah Restaurant Group, owner and franchisor of the Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan Bagel brands, named James P. O’Reilly chief concept officer. O’Reilly, a former mar-

CPK launches second
Thank You Card program

LOS ANGELES — California Pizza Kitchen launched its second annual Thank You Card program, a move to increase traffic by offering customers a chance to win prizes of up to $50,000 in cash on a return visit. The program, which company officials credited with lifting same-store sales during the second quarter of 2008, is scheduled to last through June 30. CPK will give out 2. 7 million sealed envelopes containing a prize to customers at their more than 200 full-service restaurants. The envelopes can only be opened by a CPK manager on a subsequent visit.