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October 21, 2022by David Klemt David Klemt No Comments

Cali Chains Move Quickly to Kill FAST

California Chains Move Quickly to Kill FAST

by David Klemt

If recent reporting is accurate, fast food chains with locations in California are fighting the Fast Food Accountability and Standards Recovery Act.

Several well-known restaurant chains have reportedly already dumped well over $10 million into a ballot drive effort. Among the chains lobbying to kill the bill are In N Out, McDonald’s, Wendy’s, and Chipotle.

In other words, the group of chains aiming to defeat AB-257 in California have very deep pockets. These heavy hitters are reaching deep to contribute millions of dollars to Save Local Restaurants, the coalition responsible for starting the ballot initiative.

And who are the Save Local Restaurants coalition members? The National Restaurant Association (NRA), US Chamber of Commerce (USCC), and International Franchise Association (IFA).

What is AB-257?

The Fast Food Accountability and Standards Recovery Act, also known as the FAST Act, is a California bill. Enacted on September 5 of this year, FAST amends a section of the state’s labor code that relates to food facilities and employment.

Click here to review the bill’s text in its entirety.

To summarize, FAST does the following:

Establishes the Fast Food Council, ten members appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee. The council will operate until January 1, 2029.
Defines “the characteristics of a fast food restaurant.”
Gives the Fast Food Council the authority to set “minimum fast food restaurant employment standards, including standards on wages, working conditions, and training.”
Provides the council the power to “issue, amend, and repeal any other rules and regulations, as necessary.”
Allows the formation of a Local Fast Food Council by a county, or a city that has a population of more than 200,000.

It’s that third bullet point that likely stands out the most to chain operators. On January 1, 2023, California’s minimum wage increases to $15.50 an hour. If the Save Local Restaurants ballot initiative fails, the Fast Food Council could boost the minimum wage to $22 per hour right after we all yell, “Happy New Year!”

Proponents say the bill protects the health, safety, and welfare of fast-food workers. Opponents call it radical.

Fighting FAST

According to Save Local Restaurants, it’s not just chains that want to kill FAST:

“The FAST Act is opposed by small and family-owned businesses, minority-rights groups, workers, consumers, your favorite restaurants, taxpayers and community-based organizations,” reads their website.

Among their reasons for attempting to kill the bill are:

a resulting increase in the price of food;
the elimination of thousands of jobs in California;
an increase in the cost of living in the state; and
the millions of dollars the coalition claims the bill will cost California taxpayers annually.

Reportedly, full-service restaurant operators also oppose FAST. The reason is simple: If the Fast Food Council hikes fast-food worker minimum hourly wages significantly, FSRs will struggle to compete. FSR operators will have to hike menu item prices further, a situation that’s growing untenable as consumers balk at paying more at restaurants.

Then, there’s the fact that bills similar to FAST could pass in other states. So, chains are contributing millions to see that the Save Local Restaurants ballot initiative succeeds.

Should the effort be successful, FAST will be included on California’s 2024 ballot. That means it will be suspended until 2024 and be in the hands of the voters.

Image: Tima Miroshnichenko via Pexels

March 8, 2022by David Klemt David Klemt No Comments

A Lesson in Guest Perception

A Lesson in Guest Perception

by David Klemt

At this point, it’s becoming more of a surprise to not be told that the ice cream machine isn’t working at a McDonald’s restaurant.

Per a report from earlier this year, 25 percent of their machines are broken at any time. In fact, the brand made a joke about it in 2020.

we have a joke about our soft serve machine but we’re worried it won’t work

— McDonald’s (@McDonalds) August 11, 2020

Interestingly, with all the road trips and flights I’ve taken, I had never encountered a nonfunctional ice cream at a McDonald’s. Until last week.

Feeling nostalgic, I drove to a McDonald’s near my home for a Shamrock Shake. Growing up, my father always enjoyed the Shamrock Shake LTO. I’ve had maybe one or two in my entire life.

So, I drove over, got in line, and confidently asked for a Shamrock Shake and a Mint Oreo Shamrock McFlurry. And then I heard the words I’d never heard before:

“I’m so sorry, our machine isn’t working.”

Devastated, I did what any well-adjusted adult would do: I ordered a double cheeseburger and a 10-piece Chicken McNuggets combo. Same thing as a shake and McFlurry, right?

Guest Perception

I won’t dive too far into the minutiae of the longstanding McDonald’s ice cream machine saga. By now, we’re all familiar:

These machines break so often there’s a website dedicated to the problem. McBroken shows people where ice cream machines are working and where they’re broken. (If only I had used that before my ill-fated visit…)
The machines reportedly take four hours per day to clean.
There are claims that Taylor, the manufacturer of the machines, makes 25 percent of their revenue from performing repairs.
Outlets have reported the FTC is investigating the situatithe machine’s manufacturer, Taylor.
The latest news is that Kytch is suing McDonald’s for $900 million.

I’m not a McDonald’s board member, nor am I a franchisee. So, I’m not privy to any discussions swirling around the ice cream machines in use currently.

However, I do find it surprising that a brand as massive as McDonald’s would allow this issue to continue. For a brand that claims nothing is more important than delivering a high-standard of quality food, this joke is no longer funny.

What’s more, the issue is an opening for their competitors.

Leave an Opening and a Competitor will Take it

Jack in the Box has roasted McDonald’s for their ice cream machines in the past. This month, however, they’ve amped up their trolling.

Now that the Shamrock Shake has returned, Jack in the Box has pounced.

It would’ve been enough for Jack to mock McDonald’s on Twitter during Shamrock Shake season. But nope—Jack is dragging McDonald’s even harder.

No one:
Me: Takes over https://t.co/yjghUCVmpT to promote my New St Paddy’s day shake pic.twitter.com/lToscUsynP

— Jack in the Box (@JackBox) March 4, 2022

Head over to McBroken and you’ll see a huge banner that reads, “DON’T GET McSHAMMED.” You’ll notice that the map is now also populated with Jack in the Box locations.

Click the aforementioned banner and you’ll find yourself on the Jack in the Box website. More specifically, it’s a page promoting their mobile app.

Taking it further, there’s currently a promotion encouraging the download: using the code “McSHAMMED” scores the user a $2 shake.

Since we’re in Shamrock Shake season, Jack is offering their new Oreo Cookie Mint Shake. And yes, it’s green.

Innovation and Problem Solving are Crucial

Look, I’m in no position to tell McDonald’s how to run their business. If they’re comfortable with negative guest perception and experiences, that’s on them.

It’s also on them if they want to show their guests and competitors a failure to innovate, solve problems, and be agile.

The ice cream machine debacle should be a lesson for all operators. Leave an opening and your competition will take it, slamming it shut behind them.

At best, maybe you’ll be able to adapt and overcome. At worst, they’ll be social media and marketing savvy, and roast you publicly. Once a brand’s perception slips, it can be incredibly difficult to get it back to where it once was.

As an operator, you’re an entrepreneur. Entrepreneurs innovate and solve problems.

Image: Joshua Austin on Unsplash

Wendy's fast food restaurant exterior and sign

August 18, 2021by David Klemt David Klemt No Comments

Wendy’s Looks to Ghosts for Growth

Wendy’s Looks to Ghosts for Growth

by David Klemt

Wendy’s is the latest foodservice company to announce plans to open ghost kitchens in Canada, the US and the UK.

The fast-food giant’s scheme is large-scale and part of an expansive growth strategy.

Per the company, Wendy’s plans to open 700 ghost kitchens.

Embracing the Trend

Here’s a question for you: Do you hear and read the word “pivot” or the phrase “ghost kitchen” more often these days?

Ghost kitchens seem to be the pivot of choice for restaurant groups and enterprising tech companies looking to leverage the next big thing. (There, a sentence with both “pivot” and “ghost kitchen” in it,)

The trend also appears more often than not to be the domain of Big Business.

Former Uber executive Travis Kalanick is the founder of CloudKitchens. DoorDash is also entering the ghost kitchen space, running a trial in California to see if pursuing the idea is viable.

Now, enter Wendy’s, not exactly a mom-and-pop shop in the restaurant space.

Ghost vs. Virtual Kitchen

We don’t revel in the semantics game, necessarily. But we know people are going to refer to Wendy’s ghost locations as “virtual” kitchens as well.

However, ghost kitchens and virtual kitchens have unique definitions and characteristics.

Wendy’s isn’t creating a new brand with new items they’re preparing in their existing brick-and-mortar locations. Nor do they plan to do so with their new locations under constructions currently.

Were that the case, their strategy would be a virtual kitchen plan.

Instead, the 700 locations will be separate facilities without storefronts. Also, the units will focus solely on delivery, leveraging on-demand consumer behavior.

So, the lack of storefront is arguably the greatest defining characteristic of a ghost kitchen.

Conversely, a virtual kitchen operates in a location with a storefront. However, the brand on offer exists online and not in the brick-and-mortar world of an established brand. In essence, an existing brand is offering a brand that they don’t want to dilute what they’ve already built.

That’s a Lot of Ghosts

Per reporting, Wendy’s is joining forces with Reef Technology to open and operate their ghost kitchens.

At least 50 such locations are in the works to open this year. The other several hundred locations will open between 2022 and 2025.

That means we should see more than 150 Wendy’s ghost kitchens going live per year across Canada, the US and the UK.

Partnering with Reef Technology is an interesting and telling maneuver. Reef, per their website, focuses on “urbanization” and reshaping “our urban infrastructure.”

And as CEO Todd Penelow stated last week, Wendy’s doesn’t isn’t strong in urban areas. The vision for Wendy’s new strategy is to penetrate urban markets, adding new stores and new franchisees as the brand moves forward.

Should things go according to plan, Wendy’s expects to expand from 6,500 units worldwide to somewhere between 8,500 and 9,000 in 2025.

Image: Michael Form from Pixabay

De Daltons gourmet Golden Boy hamburger, cropped image

July 6, 2021by David Klemt David Klemt No Comments

Want Champagne Onion Rings with That?

Want Champagne Onion Rings with That $6,000 Burger?

by David Klemt

Matthew McConaughey once said that the inventor of the hamburger was smart but creator of the cheeseburger was a genius.

So, what title should we bestow upon the person who created the first-ever gourmet burger?

Super-genius? Superhuman? Superhero?

Perhaps legend is high-enough praise for whomever made it acceptable to charge more than $10 for a simple menu item.

A Brief History of Haute Hamburgers

The United States is widely credited with the invention of the hamburger. However, the exact origin is unknown. Therefore, it remains heavily disputed.

Of course, we wouldn’t have today’s gourmet burgers without two decidedly standard burger powerhouses: White Castle and McDonald’s.

The former was founded 100 years ago this past March in 1921, while the latter really came into its own in 1955. However, thanks to films like The Founder, McDonald’s tends to get the lion’s share of modern burger and fast-food credit.

Regardless, the first haute cuisine burgers wouldn’t hit the market until the turn of this century. Chefs Daniel Boulud and Richard Blais are among the names that receive credit for creating the gourmet burger category.

Over the past several years, several high-dollar burgers have made headlines. For example, Corvallis, Oregon-located restaurant Juicys Outlaw Grill created a $5,000 burger ten years ago. Anyone interested in having one was required to provide 48-hours’ notice.

In 2017, Dutch chef Chef Diego Buik offered a $2,300-plus burger at South of Houston in the Hague. Just two years ago, Chef Hubert Keller featured a $5,000 burger on the menu at his Las Vegas restaurant Fleur.

Another Las Vegas restaurant, Burger Brasserie, has offered a $777 burger for nearly a decade.

Chef Gordon Ramsay’s latest restaurant, the cleverly named Gordon Ramsay Burger outpost in London (the original is in Las Vegas), features a burger that costs between $106 and $144. Oh, and it doesn’t come with fries—those come with an upcharge of ten bucks.

New King of Burgers

Now, there’s a new most-expensive burger making the scene. Interestingly, it’s not from an American restaurant.

De Daltons, a Dutch diner located about 40 minutes southeast of Amsterdam, is the home of a gourmet burger known as the Golden Boy.

Of course, this isn’t just any gourmet burger—at €5000, De Daltons is attempting to make it the gourmet burger.

So, what does one get for their nearly $6,000 investment in haute cuisine?

To start, there’s the burger. It’s made of ground A5 Wagyu brisket and chuck short rib. It’s topped with The Macallan- and Kopi Luwak coffee-infused barbecue sauce; truffled Cheddar cheese; Joselito vintage jamon (the best ham in the world); Dom Pérignon-battered onion rings; Beluga caviar; white truffle; Tiger tomato and cucumber that was pickled in matcha; smoked mayonnaise made saffron, chive and duck eggs; and king crab cooked in white wine.

Oh, and the burger is given a whiskey-smoked treatment before it’s served.

Speaking of service, what kind of bun is luxurious enough to hold the Golden Boy? A saffron- and Dom Pérignon-infused gold leaf one, of course.

Gourmet Gimmick?

The latest headline-grabbing burger is truly a hedonistic indulgence. Unlike some haute hamburgers from the past, however, it’s made with truly impressive ingredients.

Before the Golden Boy made its appearance, one simply had to make a BOUS (Burger of Unusual Size) to get attention. One could also go the “gourmet” route by pairing their signature burger with a pricey bottle of Champagne.

After those two routes turned a bit stale, chefs with impressive credentials could make news by making gourmet burgers from “fancy” meats, slapping foie gras and an aged cheese on top, and dusting the bun with gold.

De Daltons’ burger is clearly taking the gourmet burger in an ultra-luxe direction. All challengers to the King of Burger throne will have to follow suit.

Yes, the Golden Boy is a gimmick. Yes, it has helped De Daltons pull focus and grab the global restaurant spotlight. However, as ludicrous as many will find the price tag, the burger does deliver on luxe ingredients and pageantry.

So, am I suggesting that restaurateurs review their menus, local suppliers, and market to come up with their own headline-generating luxury menu item? Well, yeah.

If an operator’s kitchen team has the skills to execute on a specialty high-priced item while remaining authentic and without alienating loyal guests, go for it. If there’s only PR, marketing and revenue upside, creating one incredible “off-menu”item is worth the effort.

Again, this comes down to operators knowing their guests, their markets, and what they’re great at doing. The word “gimmick” doesn’t have to be a dirty word—it can be a positive if done correctly.

Image: De Daltons

Statue of McDonald's mascot Ronald McDonald waving

June 21, 2021by David Klemt David Klemt No Comments

McDonald’s Facing Privacy Lawsuit

McDonald’s Facing Privacy Lawsuit

by David Klemt

A McDonald’s customer in Illinois, a state with some of the strictest privacy laws in America, is suing the fast food giant.

The largest fast food chain in the world is testing artificial intelligence in select drive-thrus throughout the Prairie State.

In theory, the technology will become a valuable operational element and enhance the guest journey.

However, one plaintiff in Illinois says McDonald’s is violating the state’s Biometric Information Privacy Act (BIPA).

AI-powered Drive-Thrus

Two years ago, McDonald’s made two significant technology company acquisitions.

In March of 2019, the fast food company purchased Dynamic Yield for a reported $300 million. Six months later, McDonald’s acquired Apprente.

The former acquisition brought “decision tech” to the QSR, using its digital billboards and ordering kiosks to make recommendations to guests depending on preferences, item popularity, and time of day.

The latter purchase is intended to bring automated voice ordering to McDonald’s drive-thrus through artificial intelligence.

Per CNBC, McDonald’s CEO Chris Kempczinski says AI is delivering an 85-percent order accuracy rate in its test stores. Currently, AI is taking 80 percent of the orders at ten Illinois McDonald’s locations.

Clearly, McDonald’s is investing in tech the company believes will enhance and speed up the guest drive-thru experience.

Lawsuit

Shannon Carpenter’s class-action lawsuit alleges that McDonald’s “violated BIPA because it failed to obtain proper consent prior to collecting and disseminating Plaintiff’s and the other class members’ voiceprint biometrics who interacted with its AI voice assistant at its Illinois locations.”

Carpenter filed the lawsuit after visiting a McDonald’s location last year in Lombardi, Illinois. The location is one of ten test stores.

The complaint also says, “McDonald’s AI voice assistant goes beyond real-time voiceprint analysis and recognition and also incorporates “machine-learning routines” that utilize voiceprint recognition in combination with license plate scanning technology to identify unique customers regardless of which location they visit and present them certain menu items based on their past
visits.”

In short, the plaintiff is alleging that McDonald’s is violating Illinois’ BIPA law by:

collecting biometric information (voiceprints in this case specifically) without consent;
not making the company’s data retention policies public;
failing to declare how long customer biometric data will be stored; and
not starting how the company intends to use the collected biometric data.

So far, McDonald’s has not released a statement addressing Carpenter’s lawsuit.

Customer Data

How much is one’s privacy worth? The price of a Big Mac or a Quarter Pounder combo?

Guest data and user privacy is a hot-button topic. For example, Apple made big news this year with the rollout of iOS 14.5 and its accompanying privacy features.

Carpenter’s lawsuit against McDonald’s carries implications for how businesses can collect and use guest data.

However, it also highlights an element of operating a restaurant in our tech-driven world.

It has been suggested by some business experts that the adage “cash is king” should be replaced by “data is king.” And yes, customer/guest data is incredibly valuable.

But so is reassuring guests that their data is safe with a given business. Operators, therefore, should be transparent about what guest data they’re collecting and what they intend to do with it.

And, as the McDonald’s lawsuit makes abundantly clear, there are laws governing the collection and handling of guest data. Operators should ensure that they and their partners are handling guest data legally, ethically, and responsibly.

Image: Vijaya narasimha from Pixabay