Restaurants push pizza crusts, on-line orders

by Jeff Gelski
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Pizza Hut introduced a new gluten-free crust in January.

KANSAS CITY — New products, new leaders and new ways of ordering look to influence the U.S. restaurant industry this year. The grain-based foods industry may benefit through increased demand for pizza crusts and burger buns.

Pizza Hut, a division of Yum! Brands, Inc., hit the trifecta in the three areas. First, David Gibbs was named chief executive officer of Pizza Hut in November. Later that month the company launched the “Flavor of now,” a new menu featuring 10 crust flavors, 6 sauces and toppings such as salami and spinach. New crust flavors include red pepper, salted pretzel and asiago.

“The biggest news we’ve brought is on crust flavors, and we have lots of credibility there,” Mr. Gibbs said in a Dec. 11 investors’ call. “Pizza Hut was the one who figured out how to stuff cheese in the crust of a pizza. So it’s only natural we’d figure out how to flavor up the outside of the crust. Now of course you combine those two ideas, and we’ve now got 10 different ways to stuff your crust.”

The “Flavor of now” may tie in with Pizza Hut’s focus on on-line ordering. Mr. Gibbs said customers, when they order on-line, are able to see the ingredients on the new pizzas better.

“It’s harder off-line,” Mr. Gibbs said. “It’s harder to see this menu off-line.”

Greg Creed, c.e.o. of Yum! Brands, spoke about the early results of the “Flavors of now” menu in a Feb. 5 earnings call.

“I would be remiss if I didn’t tell you sales were softer than we expected with our initial launch, but I absolutely believe our product and brand positioning are right, but we struggled to get our communications balance to build a new brand positioning while still connecting with our core customers,” he said. “However, this is a long-term strategic initiative. We are excited by the fact that the people who have tried it loved it. Repurchase intent is greater than 90%. Look, this is just the first innings. We are working to drive more customer trial as our advertising campaign evolves to drive sales through shopper product and pricing offers.”

For another crust innovation, Pizza Hut in January launched gluten-free pizzas, available in cheese-only or pepperoni, at select restaurants nationwide. Udi’s, a brand owned by Boulder Brands, Inc., Boulder, Colo., provided the crust. The Gluten Intolerance Group, Auburn, Wash., was instrumental in the in-store training process for Pizza Hut.

In 2014, Boulder Brands and Papa Murphy’s Holdings, Inc. announced a partnership to bring Udi’s gluten-free pizza crust to the take n’ bake pizza franchise. Gluten-free cuisine ranked No. 12 among the top 20 food trends in the “What’s Hot in 2015” survey from the National Restaurant Association, Washington.

Like Pizza Hut, Dunkin’ Brands, Inc., Canton, Mass., and Starbucks Corp., Seattle, also should play roles in grain-based food sales and mobile ordering.

Dunkin’ Donuts launched a croissant donut in 2014.

“Now the croissant donut will be an ongoing item, and we will supplement that with new varieties,” said John Costello, president of global marketing and innovation for Dunkin’ Brands, in a Feb. 5 earnings call.

Dunkin’ Donuts on Feb. 11 said it had sold 8.5 million croissant donuts since their introduction as a limited-time offer in November. Beginning this March, a Boston Kreme croissant donut, a croissant donut filled with Bavarian Kreme and drizzled with chocolate icing, will be available at participating Dunkin’ Donuts restaurants throughout Monmouth and Ocean County, New Jersey.

Dunkin’ Brands, which owns both Dunkin’ Donuts and Baskin-Robbins, is testing mobile ordering, said Nigel Travis, chairman and c.e.o. of Dunkin’ Brands, on Feb. 5.

“We are moving towards a mobile-dominated world,” he said. “I think that was one of the big things that came out of this year, and what you will see is that people are constantly connected, and since Dunkin’ is a brand built for people on the go, we are positioning ourselves to capitalize on these trends.”

On-line ordering has boosted Baskin-Robbins U.S.

“On-line cake ordering continues to fuel the cake category growth,” Mr. Travis said. “We ended the year with the strongest cake comps on record, and part of the reason for this success is the result of on-line cake ordering, which contributed nearly 5% of all cake sales.”

Starbucks introduced a mobile ordering platform in Portland, Ore., in December, said Adam Brotman, chief digital officer for Starbucks, in a Dec. 4 investors’ call. Before they come to the store, customers may order ahead. The system will come to the rest of the country over the course of 2015, he said.

Increasing food sales remains a priority for Starbucks. La Boulange bakery products were in more than 11,000 Starbucks stores in the United States, said Cliff Burrows, group president, U.S., Americas and Teavana, on Dec. 4. The company’s food mix should grow on a comparable basis to more than 25% in fiscal 2019, he said.

“It will lead us to double our food sales over the next five years and deliver an incremental $2 billion from the U.S. business,” he said.

Betting on burgers

Instead of adding items, one restaurant chain is taking items off its menu. McDonald’s Corp., Oak Brook, Ill., soon will offer 11 extra value meals, down from 16, and have 8 less items on its menu, said Mike Andres, who became president of McDonald’s USA last year, in a Dec. 10 investors meeting.

Don Thompson, president and c.e.o. of McDonald’s Corp., further explained the change.

“So some are thinking, ‘OK, man, so you’re going to take away the filet, the Mac and the Quarter.’ No.” Mr. Thompson said. “If you’ve got three varieties of a certain platform, a certain sandwich, if you’ve got one of those that is not moving as much, and there’s a high-trade potential of that third one moving into the other two, then you can streamline and eliminate that. The way our menu boards are set up, each of those three counts as one EVM (extra value meal). So that’s three EVMs.”

McDonald’s, which saw its global comparable sales slip 1% in 2014, soon will have a new leader. The chain on Jan. 28 said Mr. Thompson will retire as president and c.e.o., effective March 1. Steve Easterbrook, who was senior vice-president and chief brand officer, will replace Mr. Thompson.

Two new stock symbols related to burgers and buns are now on stock exchanges.

Shareholders of Tim Hortons Inc., Oakville, Ont., on Dec. 9 approved a transaction in which Burger King Worldwide, Inc. agreed to pay $11 billion to buy Tim Hortons, a Canadian chain known for its coffee and donuts. A new parent company, Restaurant Brands International, was formed and includes more than 18,000 restaurants operating in 100 countries under the two brands. Restaurant Brands International trades under the QSR symbol on the New York Stock Exchange and under the QSP symbol on the Toronto Stock Exchange.

Shake Shack, Inc., New York, on Feb. 4 closed its initial public offering of 5,750,000 shares of its Class A common stock at a public offering price of $21 per share, meaning Shake Shack received about $112.3 million in proceeds from the offering. Shake Shack trades under the SHAK symbol on the New York Stock Exchange.

Shake Shack calls itself a modern day “roadside” burger stand. The first Shake Shack opened in New York City’s Madison Square Park in 2004. Now, Shake Shacks are found in 10 states and the District of Columbia. International licensed units include those in London, Istanbul, Turkey, and Dubai, United Arab Emirates.

Burgers and buns are becoming a bigger business. People at U.S. restaurants and other food service outlets ordered 9 billion burgers in 2014, a 3% increase from 2013, according to The NPD Group, Chicago. Casual dining restaurant menus added burgers to offset higher beef prices and the need to charge more for beef entrees.

Sandwich servings at U.S. restaurants and other food service outlets fell 2% in 2014, according to The NPD Group.

Simpler sandwich bread

Two of the leading sandwich sellers moved toward simpler ingredient lists in 2014. Panera Bread, St. Louis, said it planned to eliminate all artificial ingredients and preservatives from its food menu by the end of 2016. Subway removed azodicarbonamide (ADA), a dough conditioner, from all its bread in 2014.

Technomic, Inc., Chicago, in research released in December 2014, said most consumers want restaurants to be more transparent about menu item ingredients and that two in five consumers were concerned about food additives.

“Menu transparency is imperative and can help drive sales of healthy options,” said Sara Monnette, senior director of Consumer Innovations & Insight at Technomic. “Telling an ingredient’s story, whether it’s farm-raised, local or G.M.O.-free for instance, can directly impact consumer decisions about what to order and where to dine.”

Natural ingredients/minimally processed food ranked fifth among the top 20 food trends in the N.R.A.’s “What’s Hot in 2015” survey. Among those surveyed, 75% said natural ingredients/ minimally processed food was a hot trend, while 9% said it was yesterday’s news and 17% said it was a perennial favorite.

The N.R.A.’s 2015 Restaurant Industry Forecast gave a positive view on the industry. The forecast calls for restaurant-and-food service sales to top $709 billion in 2015, which would be up 3.8% from 2014.

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