A Year in Review Industry Remains Stable
For the Quick Service Restaurant industry, 2005 was a year of resiliency, creativity, menu changes and a revolving door for executives.
December 29, 2005
For the Quick Service Restaurant industry, 2005 was a year of resiliency, creativity, menu changes and a revolving door for executives.
Like all U.S. businesses, QSRs were affected by Hurricanes Katrina and Rita as well as increasing gas prices. Wendy's Restaurant officials blamed their third-quarter profit drop on high fuel costs, lower consumer-spending levels and store closings from the Gulf Coast's two hurricanes. Popeyes Chicken & Biscuit had 800 employees and 33 franchise operators in the areas impacted by Hurricane Katrina. According to Popeyes officials, 90 to 100 of their restaurants closed because of the storm.
However, the QSR industry did its part to help rebuild the areas. In October, with the help of 17,000 restaurants and the Red Cross, the National Restaurant Association (NRA) sponsored "Dine for America." Although the funds collected have not been made public yet, all proceeds will benefit hurricane victims.
Before disasters struck, a Gallup poll named the restaurant industry the most highly regarded business/industry sector in America. In December, Corporate Research International rated Subway the top QSR chain followed by Quizno's and Sonic.
Promotions and partnerships
Many QSRs separated themselves in the marketplace with a little creativity.
Dairy Queen used NBC's popular show "The Apprentice" in October to help promote new Blizzard flavors.
"We tapped into a creative way to leverage our appearance on The Apprentice with a really fun and exciting promotion that reaches out all across North America," said Michael Keller, chief brand officer for International Dairy Queen. "We're not the first to be on the show, but we are the first to tie in a promotion specifically built around the premise of the show."
Along the same lines of creativity, select McDonald's Restaurants offered free mobile coupons through mobile and Web-based promotion. As part of an innovative promotion, cell phone users could send text message code to receive an electronic coupon good for a free McDonald's McFlurry. In March, the worlds-largest QSR also launched remote call-in centers that took drive-thru orders.
"If you're in L.A.... and you hear a person with a North Dakota accent taking your order, you'll know what we're up to," McDonald's CEO Jim Skinner told analysts.
In July, Papa John's opened its 3,000th restaurant. To promote the occasion, Papa John's officials handed out thousands of slices at stores in the New York City area and on the streets of Manhattan.
Unconventional QSRs Panda Express and Papa Murphy's Take 'N' Bake Pizza partnered with major sports teams. The nation's leader in Chinese quick-service restaurants partnered with the Los Angeles Dodgers while Papa Murphy's baked a deal with the Seattle Seahawks.
The opening of a freestanding unit in Sao Paulo, Brazil, in 2005 marked a first for Burger King since it began operating there in 2004.
Nationwide Menu Changes
In an attempt to boost profits from their menus, many QSRs tweaked their menus throughout the year.
July 19:Church's Chicken added its spicy bone-in chicken and chicken tenders to all of its 1,234 restaurants nationwide and nearly 100 restaurants in Mexico.
July 20:Dairy Queen announced a new treat in August for tweens, ages 8 to 12, called Oreo Scoopables, adding a new twist to two All-American favorites, ice cream and Oreos.
July 20: Wendy's launched new milk and fruit cup Kids' Meal options.
July 20:Burger King rolled out Chicken Fries.
Sept. 9:Jack in the Box Restaurants debuted the Ciabatta breakfast sandwich.
Sept. 9:KFC reported its new 99-cent Snacker Sandwich was reaching strong sales volumes as high as 1,000 sandwiches per store per week.
Sept. 29:Popeyes championed a new white meat chicken fillet, hand-breaded and fried in the restaurants.
Sept. 29:Carl's Jr. announced the new Portobello Mushroom Six Dollar Burger.
Oct. 3: Jack in the Box Restaurants brought aboard the Butterfinger Cheesecake.
Major hires and fires
Shareholders don't like uncertainty. When Red Robbin's CEO Mike Snyder retired and CFO James McCloskey resigned, investors expressed immediate concerns despite solid first- and second-quarter earnings. The company was also working with the SEC on an internal audit.
Gary Grigg, Morgan Stanley retirement planning specialist, said that shareholders should be concerned if a company loses two top executives and undergoes an internal audit, but "if a CEO steps down and is replaced by a person from a similar restaurant, even if it's smaller, you shouldn't really see much of a change in the stock price."
July 13:Burger King Corporation named Greg Brenneman chief executive officer. Brenneman was formerly with TurnWorks Inc.
August 18:Panda Restaurant Group appointed Larry Behm to vice president of operations support and innovation.
Sep 19:Wendy's announced the resignation of Tom Mueller as president and chief operating officer. Mueller led Wendy's North America business and the international division.
October 26:Dunkin' Brands hired Stan Frankenthaler, renowned chef and author of The Occidental Tourist, as the company's first executive chef-director of culinary development.
Dec. 1: 7-Eleven Inc. named Joseph M. DePinto as its president and CEO.
