Week of May 31, 2010

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Pizza Hut Gets Health Check
For the first time anywhere in the world, Pizza Hut is offering a health-conscious line of delivery and dine-in pizzas and pastas. The new “Eat Well Menu” is available across Canada, and it has been approved by the Heart and Stroke Foundation’s Health Check program. The menu features Italian-inspired pizzas made on multigrain dough as well as oven-baked wholegrain pastas. Using recipes developed to meet the Foundation’s strict nutrient criteria for sodium, fat and protein, the new line offers a range of vegetarian and non-vegetarian options, with pizzas like grilled chicken and pesto-marinated tomato, and veggie-pastas featuring feta and mozzarella cheeses, roasted red peppers, olives and traditional tomato sauce. For the launch, Pizza Hut joined forces with Food Network Canada’s Janet and Greta Podleski, authors and stars of the show Eat, Shrink and Be Merry. “Our Canadian test kitchens worked very hard to create healthier options that we can be proud of,” said Dave Ross, director, Pizza Hut Marketing. “We know Canadian pizza and pasta lovers will enjoy the multigrain dough and wholegrain pasta. At the same time, they will feel good about serving it to their friends and family.”

McDonald’s Launches Salt-Reduction Program Across Canada
McDonald’s Canada is lowering the sodium level in its products by using ingredients such as sodium-reduced grilled chicken, tortilla and ranch sauce and a lighter cheese blend. First out is a lower-sodium grilled chicken snack wrap option in its Happy Meals, containing 530 milligrams of sodium, down from 780 milligrams. “I’d call it a significant reduction in sodium,” said Richard Ellis, senior vice-president of Communications and Public Affairs at McDonald’s Restaurants of Canada Ltd. Sodium levels in other menu items will also be reduced, including: the Grilled Chicken Classic Sandwich, down to 810 milligrams from 1,010; the Breakfast Burrito, down to 700 milligrams from 800; and the Mighty Caesar entrée salad, down to 780 milligrams from 910. The sodium-reduced products are now available at McDonald’s franchises across the country.

Canadian Restaurant Investment Conference Looks to Future Growth
As the economy continues to concern most restaurant operators, finding money to fund the opening and renovation of restaurants remains a challenging feat. With that in mind, Toronto-based Big Picture Conferences debuted what it’s hoping will become an annual gathering for operators, financiers and professionals interested in furthering their understanding of restaurant investment and economic matters. The inaugural Canadian Restaurant Investment Conference, held at the Toronto Hilton on May 26, builds on the success of the Canadian Hotel Investment Conference, also organized by Big Picture, which took place the day before (see next item).

The question of the day for many of the operators in attendance focused on whether there’s money available for restaurateurs to fund expansion and growth and, if so, what is the financial community looking for when it forks over funds to restaurateurs? Not surprisingly, the economy continues to be the leading concern of most business owners, but according to Garth Whyte, president of the CRFA, who opened the conference, “Investors who start up in difficult times do better than those who start in good times.”  

While 2010 is a year of economic recovery, most of the operators participating on the first panel of the day agreed that 2009 was among the worst years they’ve ever experienced.  According to Laurids Skaarup, president of Vancouver-based Moxie’s Classic Grill, 2009 “sucked.” But despite the turmoil, he said his company didn’t conscientiously change anything. “We stuck to our knitting and continued to be who we are. We didn’t discount, and we didn’t cut back on advertising.” For Ron Magruder, president and CEO of Imvescor, last year was particularly challenging as his company went through a significant change from an income trust to a corporation. “It was a distraction for our company,” admitted Magruder, who stressed the importance of being available to franchisees that need help and direction. With 70 per cent of his company’s business coming from Quebec and the Maritimes, Magruder said the company was lucky it didn’t have as many units in Ontario, which was harder hit than those regions. Though all of the company’s four brands (Pizza Delight, Scores, Mikes and Bâton Rouge) are now showing positive growth, Magruder doesn’t think the recession is over. He stressed the importance of sticking to fundamentals. “Now is not the time to lower your service standards.”

Despite the economic turmoil, some companies, like A&W, managed to have one of their best years. “We’ve had 28 quarters of positive same store sales,” boasted Don Leslie, CFO of A&W Food Services. According to Leslie, the company posted same store sales of five per cent and continued its expansion program into Ontario, with a total of 150 units now operating. The situation wasn’t as positive at SIR Corp., which saw its downtown Toronto stores impacted by declining sales. As the economy plummeted in 2008, Peter Fowler, CEO, SIR Corp., said he saw “big wines, big dinners and expense accounts starting to decline. We saw the effect in Canyon Creek, Alice Fazooli’s and then Jack Astors,” said Fowler. To combat the declines, he admitted having some price drops so that “customers would trade inside rather than outside.” According to Fowler, sales started to climb back up last fall, and Jacks and Canyon Creek are now showing five per cent increases.

While a less-than-stellar operating environment may not be what the financial community is looking to hear before it makes decisions to lend money, the economic situation in Canada is much better than it is south of the border, said Robert Beiter, chief risk officer, GE Capital. “In the U.S., there has been a lot of volatility that hasn’t been here.” Beiter admits the company is not focused as much on new concepts or start ups. “We like multi-unit chains, those with two, three or four units. We also like to lend on cash flow not as focused on equipment lending.” According to Leiter, the ideal size for investment is $1 million or up, but he says “We’re not afraid of $10 to $15 million.” Ultimately, Beiter believes operators looking for money should come to the table prepared — “be sure you have a strong plan in place and ensure you have a solid franchise relationship.”

2010 CHIC Conference Shows Confidence
For those who attended the 2009 edition of the Canadian Hotel Investment Conference — a scene set smack in the middle of a crippling recession, where there were more questions than answers as to the future of the industry — the 2010 incarnation of the widely attended event, held at downtown Toronto’s Hilton hotel, on May 25, would have provided at least some relief. While the market is still challenging, and few properties have been left unscathed by the ebb and flow of global credit whims, those presenting at the 2010 CHIC conference were able to analyze what had indeed happened and what is most likely to come. “We’ve seen good years, bad years and last year,” quipped Lyle Hall of HLT Advisory, one of the event’s hosts, in his opening remarks. However, he went on to note that things are looking brighter. “We’re certainly seeing the ground level here, and as the GDP goes, so does the hotel business. The outlook is positive, and the high-level prognosis is encouraging.”

Providing that high-level prognosis immediately following the opening remarks was the trio of Steve Rushmore and Betsy MacDonald of HVS and PKF Consulting’s David Larone. Together, they offered a mixed salad of numbers, at one point compelling HLT’s Hall to comment that it was like “drinking data from a fire hose.” But, when the power-point dust had settled, attendees were left with the impression (and the numbers to prove it) that the economy and the hospitality business is turning the corner, although, as Larone pointed out, it’s turning that corner from a battered position. “Supply is slowing, which should help, and there will be modest but positive growth in 2010, but that’s coming off of a very low base level. It sure took a kicking,” he said.

While the situation is becoming rosier for many owners, one fascinating breakout session identified trouble down the road for those who signed long-term mortgage deals coming due in 2012, simply because many of them were of the now demonized “interest only,” or carried a low equity-to-debt ratio. According to a panel featuring Bruce Moore of CIBC World Markets, John Peters of Meridien Credit Union, Alan Pyle of RFA Group and Robert Shiller of Romspen Investment Corporation, negotiating new mortgage terms for owners who have only put six per cent equity back into their properties over the course of the first five-year term, could see those owners struggling to find a new financial dance partner in 2012. “Our typical deal in 2001 was at about 60 per cent loan-to-value,” said Peters. “In 2006 and 2007, that grew to 70, and sometimes 75 per cent. The reality is, back in those years, everyone was stretching, which is typical in a growth time. It’s just much tighter now. A 2006 mortgage is going to have problems. With only six per cent, or in some cases no repatriation, and now RevPAR and occupancy is down, it’s going to be hard to refinance that debt.”

Not all the breakout sessions came with dire warnings though, as those on subjects like capital improvements, asset manager and management-company relations, and the art of closing deals produced attitudes more in line with the cautious optimism of the morning session. The event wrapped up with a six-man panel discussing how to raise and preserve capital in tough times. It featured some of the hotel industry’s most influential executives, including: Gil Blutrich of Skyline Investments; Don Cleary of Marriott International; Tony Cohen of Global Edge Investments; Kenny Gibson of Westmont Hospitality Group; Kevin Mallory of CBRE Hotels and Simon Turner of Starwood Hotels and Resorts. Next year’s CHIC, the event’s 15th anniversary, promises to be big as the conference shifts locations to the soon to open Ritz-Carlton Toronto.   

Michael Deutsch Named Executive Chef at Sutton Place Vancouver
The Sutton Place Hotel in Vancouver has appointed Michael Deutsch, a former Sutton Place employee, to the position of executive chef. He will be overseeing the culinary operations of the 397-room hotel and managing Fleuri Restaurant, Gerard Lounge, the full-time banquet facility and the other F&B outlets within the hotel. “After years of working in so many different countries and for many fine establishments, it is great to be back in my hometown, where it all began,” said Deutsch. A graduate of Vancouver’s Dubrulle French Culinary School, Deutsch worked at a number of Vancouver-area restaurants before joining the Sutton Place Hotel in 1997 as chef de partie, rising to chef de cuisine in 2000. Subsequently, Deutsch was selected by Moët & Chandon to work in several Michelin-star restaurants and hotels in the Champagne region of France. He then moved onto the Hotel Le Sirenuse in Positano, Italy, and from there went to the five-star Landis Hotel in Taipei. Most recently, Michael has been working as executive chef at the Hilton Whistler Resort & Spa.  

Talent Hunt Underway Across Canada for TV’s Top Chef
A cross-Canada search for chefs with talent and charisma started this past weekend at the annual Eat! Vancouver show and continues through June 14. Food Network Canada is scouting for talented chefs for Top Chef Canada, a spinoff of the hit U.S. show. Selected candidates will battle in gruelling competitions that will put their skills and creativity to the test. Overseeing the action will be head judge and Toronto celebrity chef and entrepreneur, Mark McEwan. The series will premiere in spring 2011. For the show, chefs will compete through many rounds of “quick-fire” and elimination challenges, and there will be wins for chefs’ favourite charities as well as $100,000 for the last chef standing.

Inaugural Dinner of CCFCC Honour Society, June 2, Windsor, Ont.
The newly formed CCFCC Honour Society of the Canadian Culinary Federation will hold its Inauguration Dinner Wednesday, June 2, at the Essex Golf & Country Club in Windsor, Ont. The event is being held in conjunction with the annual CCFCC National Conference, held May 30 to June 4 at Caesars Windsor and St. Clair College of Applied Arts and Technology. The Conference is being hosted by the Culinary Guild of Windsor. The Chair of the Honour Society is Bruno Marti CCC, of Ladner, B.C. A posthumous membership has been awarded to the late Hans Bueschkens of Windsor.

The founding members of the CCFCC Honour Society, listed by region, are: Western — Julius Pokomandy, Vancouver; Bruno Marti, Vancouver; Hubert Scheck, Vancouver; Bruce Wilson, Vancouver; Fred Zimmerman, Calgary; Paul Mastalir, Calgary; Takashi Murakami, Winnipeg; John Reimers, Winnipeg; Marcel Hemery, Edmonton; Arthur Raynor, Calgary; Valentin Kremzar, Edmonton; Central — Albert Schnell, Toronto; Klaus Theyer, Toronto; Wilhelmus Brand, Toronto; Nick Schweitzer, Toronto; Eastern — Marcel Kretz, Montreal; Georges Chauvet, Montreal; Pierre Clement, Ottawa; Atlantic — Roy Butterworth, Moncton; Gerald Crewe, St. John’s; Bud Bremner, Halifax; and Vinicio Di Nillo, St. John’s.

Druxy’s ‘Fresh Deli Revolution’ Offers 50 Free Choices
Customers are now in the driver’s seat at Druxy’s Famous Deli with the company’s new ‘Fresh Deli Revolution’ concept that will allow diners to choose from 50 sandwich and salad toppings for free. The program, and a revitalized menu that features a twist on the classic grilled cheese, has already been rolled out at 25 of the Toronto-based chain’s 48 locations. “We want to give our customers the power of choice with the addition of dozens of fresh ingredients and the ability to design your own sandwiches and salads,” said Peter Druxerman, vice-president of Marketing.  “The focus is on serving fresh food fast and ensuring that every Druxy’s visitor gets exactly what they’re looking for.”

Unitholders Reject Holloway REIT Conversion to Corporation
Unitholders of publicly traded Holloway Lodging Real Estate Investment Trust units have rejected its proposed conversion from an income trust structure to a corporation at its annual and special meeting held on May 25. A special meeting of holders of the Halifax-based REIT’s 6.5 per cent convertible unsecured subordinated debentures scheduled to follow the meeting was not able to proceed. Management said Holloway continues to believe that the proposed conversion is in the best interests of the REIT and intends to continue to pursue the conversion transaction and may consider convening further special meetings of unitholders and debenture holders prior to Dec. 31.

Accor’s Motel 6 Supports Ronald McDonald House Charities
Carrollton, Tx.-based Motel 6 has announced a sponsorship with Ronald McDonald House Charities (RMHC) to provide support to the RMHC program in providing a “home away from home” for families of seriously ill or injured children who must travel away from home for medical treatment. Motel 6 will donate US$300,000 to RMHC during a four-year agreement and will promote RMHC on its redesigned website, motel6.com with information and a “donate now” button that links to a page where an online donation can be made. Olivier Poirot, CEO for Accor North America, Motel 6 and Studio 6 commented, “This sponsorship will allow our employees and our guests the opportunity to be a part of the very important work of Ronald McDonald House Charities — whether that’s through donating funds or their valuable time.” The 35-year-old Ronald McDonald House program now operates more than 270 Houses in 52 countries, including 12 Houses in Canada.

Social Media Boosts KFC’s Double Down Sales in U.S.
With more than 10-million bun-less Double Down sandwiches sold in one month, KFC’s limited-time-only product offering in the U.S. will stay on the menu after its scheduled May 23 cut-off date. Featuring two strips of bacon, cheese and the Colonel’s-own sauce between two fried or baked chicken breasts, the fried version of the sandwich has 32 grams of fat and 1,380 milligrams of sodium. “We’ve really never seen anything like it,” said Javier Benito, executive vice-president of Marketing and Food Innovation at Louisville, Ky.-based KFC. “From real-time Twitter reviews and YouTube videos of people eating the sandwich to Facebook fan pages and Flickr photo albums, the Double Down has become a social-media sensation.” The Double Down is not available in Canadian stores.

Best Western Partners with HotelsCombined.com
Phoenix-based Best Western International, on behalf of its more than 4,000 independently owned and operated Best Western hotels worldwide, has made an agreement to allow distribution of these properties via HotelsCombined.com, considered to be the world’s leading hotel meta-search engine with a database of more than 200,000 hotels from 195 countries. HotelsCombined.com has a database of more than 200,000 hotels from 195 countries, aggregating prices from prominent online travel agents and hotel chains, including Expedia.com, Travelocity.com, Booking.com, Hotels.com, Hilton and Holiday Inn.

Rational Offers “Cash-for-Trash” Equipment Plan
Inspired by the automotive industry’s cash-for-clunkers and recycle-your-ride programs in both Canada and the U.S., Rational is stepping in with a “Cash-for-Trash” program of its own, designed to convince chefs and restaurant owners to upgrade their kitchen equipment. Unlike the automotive programs, the company does not take possession of old equipment, but Rational is offering customers rebates of up to $1,000 towards the purchase of a SelfCooking Centre if it is replacing an existing, older combi steamer or heavy conventional cooking equipment. “In this challenging economy, many operators are continuing to use outdated, inefficient or space-hogging equipment to avoid the costs of an upgrade, and they’re being forced to forego the kind of investment that can help their business grow and thrive,” said Vinod Jotwani, director of Marketing, Rational U.S.A. and Canada. “We started the Cash-for-Trash program to make the advanced SelfCooking Center technology more accessible for operations that want to grow or are in need of an equipment makeover.” For full details on the offer, click here.

Canada’s Largest Pork-Processing Plant for Sale
One of the largest and most efficient pork-processing facilities in Canada is up for sale. Maple Leaf Foods (MLF) has started the sale process for its 365,000-square-foot Ontario pork-processing facility in Burlington, Ont. “The sale of the Burlington business will complete the last phase of Maple Leaf’s protein transformation journey and supports our commitment to refocus our growth in the value-added meat, meals and bakery business,” said Michael Vels, CFO. “We are reinvigorating the sale process following renewed interest, including the potential of completing a sale to a producer group.”

CRFA Sells Alberta Tradeshow to MediaEdge
The Alberta Foodservice Expo, previously the Alberta Foodservice Show, has been sold to Toronto-based MediaEdge Communications Inc. and will be held at the Calgary Exhibition & Stampede Grounds (BMO Centre) on October 24 to 25. The event was previously owned and operated by the Canadian Restaurant and Foodservices Association (CRFA), which will be the title sponsor of the show and assist in developing and promoting the event.  

Sports 3D-TV Now Playing in 1,000 U.K. Pubs
More than 1,000 pubs and clubs across the United Kingdom are showing sporting events in 3D-TV on specially adapted screens. Sky Sports, a service of the U.K.’s and Ireland’s main satellite pay-TV company British Sky Broadcasting, has introduced the service called Sky-3D by using its own specially adapted TV cameras to record U.K. sporting events. Viewers in the pubs wear Guinness-branded polarized glasses available at £5 a pair at the bar (refundable upon returning the glasses). Described as the first broadcaster in the world to show sporting events in 3D, Sky Sports’ director of TV product design and development, Brian Lenz, explained, “We need people to see 3D to understand why we’re so passionate and believe it’s such a great experience. That doesn’t mean that you take die-hard cynics and turn them into advocates, but when it’s done right, a lot of people really do love it.” Sky Sports first introduced 3D sports broadcasting at 40 Odeon and Cineworld cinemas across the U.K. on Feb 6. In April it started recruiting pubs and clubs and launched a regular service earlier this month.

 

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