Some Phoenix-area restaurants, bars and coffee shops are seeing an uptick in business after a tough 2009 took a toll on their bottom lines.

January bar and restaurant sales have received a boost in the Phoenix market from the Tostitos Fiesta Bowl, National Football League playoff games and some improvement in consumer confidence. The sector is hoping February’s start to spring training will further help sales.

“We have seen better foot traffic, especially the weekend of the 15th of January with the (P.F. Chang’s) Rock ’n’ Roll Marathon and NFL games. It was the best Sunday we have ever had in our 16 years of business,” said Jim Scussel, owner of Four Peaks Brewing Co., which operates bars in Tempe and Scottsdale. “Our general numbers are up in January over last year, so that means better foot traffic.”

Chad Barnett, who owns 30 Subway restaurants in Arizona, said foot traffic is equal to or better than it was at the same time last year.

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Driven by improvements in both business performance and expectations for future business conditions, the National Restaurant Association’s comprehensive index of restaurant activity rose to its highest level in 22 months in December.  The Association’s Restaurant Performance Index (RPI) – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – stood at 98.7 in December, up 0.9 percent from November and its strongest level in nearly two years. 

“The RPI’s strong gain in December was the result of broad-based improvements among several index components,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association.  “Although restaurant operators continued to report a net decline in same-store sales and customer traffic, both registered their strongest performances since the summer of 2008.”

“Along with a solid improvement among the current situation indicators, restaurant operators are increasingly optimistic about industry growth in the months ahead,” Riehle added.  “More than a third of restaurant operators expect to their sales to improve in six months, the highest level in more than two years.”

The Restaurant Performance Index is based on the responses to the National Restaurant Association’s Restaurant Industry Tracking Survey, which is fielded monthly among restaurant operators nationwide on a variety of indicators including sales, traffic, labor and capital expenditures.  The RPI consists of two components – the Current Situation Index and the Expectations Index.  The full report is available online. A video of Riehle providing an update on the RPI and 2010 Restaurant Industry Forecast is also available.

The RPI is constructed so that the health of the restaurant industry is measured in relation to a steady-state level of 100.  Index values above 100 indicate that key industry indicators are in a period of expansion, and index values below 100 represent a period of contraction for key industry indicators.  Despite the solid improvement in December, the RPI remained below 100 for the 26th consecutive month.

The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 97.3 in December – up a strong 1.4 percent from November and its highest level since August 2008.  However, December still represented the 28th consecutive month below 100, which signifies contraction in the current situation indicators. 

Although restaurant operators reported negative same-store sales for the 19th consecutive month, the overall results improved dramatically in December.  Thirty-five percent of restaurant operators reported a same-store sales gain between December 2008 and December 2009, well above the 24 percent of operators who reported higher sales in November.  Forty-nine percent of operators reported a same-store sales decline in December, down sharply from 65 percent who reported negative sales in November.   

Restaurant operators also reported an improving customer traffic performance in December.  Thirty percent of restaurant operators reported an increase in customer traffic between December 2008 and December 2009, up from just 21 percent who reported higher customer traffic in November.  Forty-seven percent of operators reported a traffic decline in December, down from 62 percent who reported lower traffic in November.

Although restaurant operators reported stronger sales and traffic results in December, capital spending activity continued to drop off.  Thirty-one percent of operators said they made a capital expenditure for equipment, expansion or remodeling during the last three months, down from 33 percent last month and the lowest level on record.

The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 100.0 in December – up from a level of 99.6 registered in the previous two months.  December represented the first time in eight months that the Expectations Index reached the 100 level, which means restaurant operators were no longer pessimistic about the six-month outlook for the industry.   

Restaurant operators are increasingly optimistic about sales growth in the months ahead.  Thirty-five percent of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), up from 31 percent who reported similarly last month and the highest level in more than two years.  In comparison, 21 percent of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, down from 24 percent who reported similarly last month.

Restaurant operators are also more optimistic about the direction of the economy in the months ahead.  Thirty-four percent of restaurant operators said they expect economic conditions to improve in six months, while 18 percent expect economic conditions to worsen during the next six months.  Last month, 27 percent of operators said they expected the economy to improve in six months, while 19 percent expected economic conditions to deteriorate. 

Despite the positive outlook for sales and the economy, restaurant operators’ plans for capital expenditures dipped somewhat this month.  Thirty-nine percent of restaurant operators plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, down from 41 percent who reported similarly last month. 

The RPI is released on the last business day of each month, and more detailed data and analysis can be found on Restaurant TrendMapper (www.restaurant.org/trendmapper), the Association’s subscription-based service that provides detailed analysis of restaurant industry trends.

 Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which is comprised of 945,000 restaurant and foodservice outlets and a workforce of 13 million employees. Together with the National Restaurant Association Educational Foundation, the Association works to lead America’s restaurant industry into a new era of prosperity, prominence, and participation, enhancing the quality of life for all we serve. For more information, visit our Web site at http://www.restaurant.org.

Rubio’s Restaurants Inc. has received a revised offer to buy the Baja-styled fast food chain from a group of Los Angeles investors. And the company says the answer is just the same as before: No to this particular offer, but we’re willing to talk.

The offer from Alex Meruelo and Levine Leichtman Capital Partners IV, L.P. comes in at $8.50 per share, up from $8 per share offered in October. Rubio’s rejected that offer in an Oct. 29 press release, but left the door open for further discussions.

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Burger King Holdings Inc. franchisees will get to hold onto their entire soda rebate funds for now, potentially crimping the burger chain’s plan to kick off 2010 with a beefier national ad presence.

Franchisees in the coming weeks will receive the full rebate, earned from buying soda syrup, from Coca-Cola Co.,  and Dr Pepper Snapple Group Inc., as Burger King has deferred diverting up to 20% of those funds to its national advertising pool due to pending litigation, a Burger King spokeswoman said late Thursday. The February payment is one of two franchisees receive annually from the soda companies.

Burger King was eyeing the extra funds to help boost its national advertising presence by as much as 25% in 2010 versus 2009, helping to promote its products, including a showcase of new items cooked on a new broiler, and help close the gap with competitor McDonald’s Corp.

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Tomorrow will be the deadline for Quiznos Subs franchisees to join in or opt out of the settlement agreement of four class action lawsuits that was approved by Judge Rebecca Pallmeyer in Illinois federal court last November. The 160-page legal document cautiously details the structure of the plan to compensate approximately 10,000 restaurant owners, in order to wipe the slate clean for Quiznos after years of litigation and bad press.

Included in that number are current and former franchisees, and various classes of SNOs (Sold but Not Opened) where buyers bought franchises but were unable to find locations or open their stores in the required time period of their franchise agreements. SNOs had to forfeit their franchise fees.

Quiznos claims the cost of settling the lawsuits is approximately $100 million, which will impact almost 7,000 individuals in the system, as well as several thousand more who have closed or never opened their stores. Because the litigation revolved around the company’s supply chain and food costs, marketing and advertising funds, disputes with franchise owners and other franchise investors, the settlement offers related solutions.

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The past year felt like one of the longest ever for foodservice businesses, and one most weren’t sad to leave behind. Even though they feel they’ve waited long enough for an economic recovery, predictions are that they’ll be waiting a little bit longer.

But so far, the new year’s bringing more of the same, and in some instances, worse results, as multiple restaurant chains have already filed for Chapter 11 bankruptcy.

Once the new year got going, research firm Technomic Inc., Chicago, issued a revised 2010 restaurant industry forecast, adjusting it downward on Jan. 25. The firm cited concern over job losses, underemployment and continued consumer frugality in dining away from home as its primary reasons for its prediction of a 1.6% industry decline in 2010.

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Amidst one of the toughest years the restaurant industry has ever endured, Papa Murphy’s International today announced that its total U.S. systemwide sales grew to $630 million in 2009, up over 7% from 2008. The take ‘n’ bake pizza pioneer ended the year with 1,185 locations, opening 83 in 2009. Same-store-sales were up more than 2%, while most industry watchers estimated the pizza category to be down about 7%.

“There’s a lot to be proud of,” said CEO John Barr, commenting on 2009’s results.  ”We share this pride, of course, with our hundreds of franchisees, our field support teams and our vendor partners.  Franchisors don’t succeed unless their franchisees are successful, so I’m confident 2009 was a year that made everybody happy.”

In addition to the company’s stellar sales and store openings, 2009 highlights consist of:

• New territory. Franchising agreements signed last year equate to over 130 future stores, many in major markets new to Papa Murphy’s. They include Charlotte, North Carolina, Greensboro, North Carolina, Charleston, South Carolina, and Savannah, Georgia.  
• More franchisees. Papa Murphy’s added 46 new franchise entity groups to end the year with 478 franchise owners in 34 states and two Canadian provinces.
• High satisfaction. Franchise owners rewarded Papa Murphy’s with extremely high satisfaction ratings in a survey conducted by Franchise Business Review. As a result, Papa Murphy’s ranked as one of the top food franchises for 2009.
• Top honors. For the seventh consecutive year Papa Murphy’s was named “Best Pizza Chain in America” in the Restaurants and Institutions “Consumers’ Choice in Chains” survey. On top of that, Pizza Today magazine crowned the company “Chain of the Year” for the fourth time.  And finally, Papa Murphy’s success qualified it as an Inc. magazine “Top 100 Food & Beverage” company and a Zagat “Top Food” and “Top Service” restaurant(1).

Papa Murphy’s is the fifth-largest pizza chain in the country and the pioneer and leader of the take ‘n’ bake pizza segment. Papa Murphy’s operates nearly 1,200 franchised and corporate-owned locations in 34 states and Canada. The Vancouver, Wash.-based company offers custom-made pizzas featuring high-quality fresh toppings generously layered on pizza dough that is made fresh each morning in each store.  By baking Papa Murphy’s pizzas at home, customers get to experience the home-baked aroma of a convenient, delicious meal that the brand is known for. In addition to handmade pizzas, the company offers a growing menu of take ‘n’ bake items, including Cheesy Bread, Cinnamon Wheels, and chocolate chip cookie dough. Papa Murphy’s has been voted “Best Pizza Chain in America” for seven consecutive years by consumers nationwide in the Restaurants and Institutions “Consumers’ Choice in Chains” survey and is a four-time recipient of Pizza Today’s Chain of the Year award, most recently in 2009. For more information, visit www.papamurphys.com.

Bain Capital, a leading global private investment firm, today announced the signing of a definitive agreement to acquire Higa Industries Co., Ltd.,  the long-time master franchisee of Domino’s Pizza in Japan. Bain Capital will acquire Higa Industries from its three current shareholders — Duskin Co., Ltd., Daiwa SMBC Capital, and Ernest M. Higa, the company’s founder and CEO. Financial terms of the private transaction were not disclosed.

Domino’s Pizza has been operating in Japan for 25 years under an exclusive master franchise agreement between Higa Industries and Domino’s Pizza International, Inc., a wholly owned subsidiary of Domino’s Pizza LLC. Higa Industries currently operates 179 franchised Domino’s Pizza stores in Japan. Domino’s Pizza was the first pizza delivery chain in Japan and is today the world leader in pizza delivery with more than 8,000 stores in over 60 countries.

“Under the franchise agreement with Higa Industries, Domino’s Pizza has built a strong competitive position in the pizza delivery industry in Japan by leveraging its distinctive product, high quality service, and unique online marketing strategies,” said David Gross-Loh, a Managing Director at Bain Capital in Tokyo. “The strength of this position is evident when you consider that despite a tough environment for the restaurant industry, the company has achieved steady growth in both sales and profit in Japan over the last three years.”

“We look forward to working with the Higa Industries team to support the continued growth of Domino’s Pizza in Japan and further strengthen its competitive edge,” added Yuji Sugimoto, a Managing Director at Bain Capital. “We believe there are significant opportunities for store growth, operational improvement, and attractive new product introductions, all of which can be aided by our knowledge of Domino’s Pizza and the resources of its global operations network.”

Bain Capital has had a long and successful history with Domino’s Pizza. The firm acquired a majority stake in Domino’s Pizza in a private transaction in 1998. Domino’s Pizza, Inc. became a public company in 2004, and Bain Capital retains a significant minority stake in the company.

Bain Capital established offices in Tokyo in 2006, and has a team of 20 investment and operations professionals in Japan to pursue investment opportunities and work with its portfolio companies.  The firm has a strong track record of partnering with management teams and employees to build significant value.  Bain Capital has made investments in a variety of leading companies with principal or significant operations in Japan, including BELLSYSTEM 24, MEI Conlux, Sun Telephone, D&M Holdings, Toys “R” Us, and Burger King. The firm’s experience in the QSR and food service industry includes current investments in Dunkin’ Brands (Dunkin’ Donuts and other brands), and OSI Restaurant Partners (Outback Steak House and other brands).

The transaction is expected to close in early February.  Bain Capital has received committed financing for the deal from the Bank of Tokyo Mitsubishi UFJ.

About Higa Industries

Higa Industries is the master franchisee in Japan of Domino’s Pizza International, Inc. (www.dominos.jp).  Domino’s Pizza was the first delivery pizza chain in Japan, and has been operating in the country for 25 years under an agreement with Higa Industries, a privately held company.

About Bain Capital

Bain Capital, LLC (www.baincapital.com) is a global private investment firm that manages several pools of capital including private equity, high-yield assets, mezzanine capital and public equity with more than $65 billion in assets under management.  Since its inception in 1984, Bain Capital has made private equity investments and add-on acquisitions in over 300 companies around the world, including investments in a broad range of companies such as BELLSYSTEM 24, Sun Telephone, D&M Holdings, MEI Conlux, Stream International, Toys “R” Us and Burger King.  The firm has a team of over 300 professionals dedicated to investing in and supporting its portfolio companies.  Headquartered in Boston, Bain Capital has offices in Tokyo, Hong Kong, Shanghai, New York, London, Munich and Mumbai.

Citing continued concern over job losses, underemployment and continued consumer frugality in dining away from home, Technomic revised its 2010 U.S. foodservice industry sales forecast downward. Technomic now expects the industry to decline 1.6 percent, down from the 0.8 percent decline it had previously estimated. While the forecast remained unchanged for most foodservice segments, weaker than anticipated sales in major areas including fast food, business dining, and vending segments prompted the downward adjustment for the overall industry.

In comments first delivered to clients at its Foodservice Planning Program meeting, Technomic acknowledged that some segments will outperform the industry at large, most notably education, supermarket foodservice and healthcare.

Still, all segments will continue to contend with a foodservice environment that will remain challenging throughout 2010. “Given current dynamics among consumers, we don’t see the industry returning to the sales levels it previously enjoyed until 2011 or even early 2012,” said David Henkes, Technomic vice president. “With demand remaining weak and bundled deals and promotions driving down check averages, topline sales growth among foodservice operators won’t bounce back quickly.”

Additional details on Technomic’s current forecast for all major U.S. foodservice segments can be viewed at their web site.

About Technomic

Technomic provides clients with the facts, insights and consulting support they need to enhance their business strategies, decisions and results. Its services include numerous publications and digital products, as well as proprietary studies and ongoing research on all aspects of the food industry.

With the economic downturn easing, the restaurant industry is expected to show gradual improvement in 2010, according to the National Restaurant Association’s recently released 2010 Restaurant Industry Forecast. Industry sales are projected to reach $580 billion this year, a 2.5 percent increase in current dollars over 2009 sales. When adjusted for inflation, 2010 sales will be essentially flat, which is an improvement over the 1.2 percent and 2.9 percent negative growth in real sales that the industry experienced in 2008 and 2009, respectively.

Restaurants will continue to be strong contributors to the recovery of the nation’s economy, with industry sales representing 4 percent of the U.S. gross domestic product and employees comprising 9 percent of the U.S. workforce.

“The past two years have been a very challenging time for our industry. While there are still substantial challenges ahead, we are encouraged that the outlook is improving,” said Dawn Sweeney, President and CEO of the National Restaurant Association. “With a total economic impact of more than $1.5 trillion, the restaurant industry is a strong player in the economic recovery. Restaurants are the cornerstone of communities across this nation and we are a key player in propelling job retention and creation across the United States.”

Industry Segment Growth
Continuing the trend from last year, the quickservice restaurant segment is expected to fare slightly better than the fullservice segment as diners focus on value and specials. Quickservice restaurants are projected to post sales of $164.8 billion in 2010, a gain of 3.0 percent over 2009. Sales at fullservice restaurants are projected to reach $184.2 billion in 2010, an increase of 1.2 percent in current dollars over 2009.

The eating-and-drinking place segment expected to show the strongest growth in 2010 is social caterers, whose sales are expected to increase by 4.5 percent. Among all commercial industry segments, the strongest growth is expected in retail-host restaurants (including those located in gas/service stations and drug- and grocery stores) with a 4.9 percent sales increase.

Workforce Outlook
For only the second time in nearly half a century, the restaurant industry lost jobs in 2009. Despite the losses, the industry still outperformed the national economy, and job growth is expected to resume in 2010. The restaurant-and-foodservice industry remains one of the nation’s largest private sector employers with its 12.7 million employees. By 2020, the industry is projected to employ 14 million people – an increase of 1.3 million jobs.

State Sales Growth
Colorado is expected to post the strongest sales growth in 2010 at 2.9 percent (2010 industry sales of $8.7 billion), followed by Idaho at 2.8 percent ($1.6 billion). Forecasted to post growth of 2.7 percent: New Jersey ($12.8 billion), New York ($29.0 billion), North Carolina ($12.8 billion) and Texas ($34.8 billion).

The top states by restaurant sales volume in 2010 will be California at $58.0 billion (2.3 percent growth); Texas at $34.8 billion (2.7 percent growth); New York at $29.0 billion (2.7 percent growth); Florida at $27.6 billion (2.4 percent growth); and Illinois at $18.7 billion (1.9 percent growth).

Consumer and Menu Trends
According to the National Restaurant Association’s 2010 Restaurant Industry Forecast, consumers will continue to seek value, convenience and expanded menu options in 2010 – and restaurants will deliver. Consumers forced to cut back on spending say they aren’t dining out as often as they would like, and this pent-up demand will turn into restaurant traffic as economic recovery continues.

The Association predicts that growth opportunities can be found in delivery and other off-premise options, cooking classes and other interactive guest activities, and using new media to reach new and returning guests.

Social media will become more critical to restaurant marketing this year. A good plan and solid understanding of those tools – including Facebook, Twitter, Yelp, and YouTube – can help operators mitigate the economic environment. “Word of mouth” has moved online, and more consumers use the Web to browse menus, make reservations, and get recommendations from other diners. Restaurants’ use of e-mail, Internet and cell phone text messages in marketing efforts is also a growing trend.

Restaurant operators continue to step up their efforts to go green, investing in energy-efficient equipment and fixtures, using recyclable materials and reducing their water use. Green initiatives not only help manage costs, they can also drive traffic. Four of 10 fullservice and 31 percent of quickservice operators plan to devote more resources to green initiatives in 2010 than they did in 2009, and 4 in 10 consumers say they choose restaurants based on their conservation practices.

Locally sourced food, sustainability, and health and nutrition will be the top trends on restaurant menus this year. Seventy percent of consumers say they are more likely to visit restaurants that offer locally produced food, and nearly three out of four say they are trying to eat healthier in restaurants now than they did two years ago.

The top 10 menu trends in the Association’s “What’s Hot in 2010” survey of more than 1,800 professional chefs (American Culinary Federation members) are: locally grown produce, locally sourced meat/seafood, sustainability as a culinary theme, bite-size desserts, locally produced beer/wine, healthy kids’ meals, half-potions, farm/estate-branded ingredients, gluten-free/allergy-conscious items, and sustainable seafood.

Ethnic cuisines and flavors are also a hot menu trend this year, including regional ethnic cuisine and fusion cuisine. Consumers are interested in trying French, Spanish, Japanese (other than sushi), Thai, Cajun/Creole, soul food and sushi.

For more information about the National Restaurant Association’s 2010 Restaurant Industry Forecast, visit www.restaurant.org/research/forecast.

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which is comprised of 945,000 restaurant and foodservice outlets and a work force of 12.7 million employees. Together with the National Restaurant Association Educational Foundation, the Association works to lead America’s restaurant industry into a new era of prosperity, prominence, and participation, enhancing the quality of life for all we serve. For more information, visit our Web site at www.restaurant.org.

McDonald’s continues to beef up with its latest quarterly results. However, the stock might be getting a wee bit too pricey, even as the company’s allure with bargain-hunting consumers begins to show some signs of apparent weakness.

Mickey D’s net income increased 23%, to $1.22 billion, or $1.11 per share. Without one-time items, earnings dropped to $1.03 per share, which still exceeded analysts’ expectations for $1.02 per share. Revenue increased 7%, to $5.97 billion, a gain that shrank to 2% when adjusted for currency effects. Global comps increased by 2.3% in the quarter.

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Benihana plans to merge with its subsidiary and launch a $30 million stock offering.

The Miami-based operator of Japanese-themed restaurants, which has a downtown Milwaukee restaurant at 850 N. Plankinton Ave., filed the paperwork with the Securities and Exchange Commission on Wednesday, calling for a shareholder meeting on Feb. 22 in Fort Lauderdale to vote on the merger.

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Taco Del Mar Franchising Corp. today announced that it is voluntarily restructuring its business under the protection of Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court in Seattle. The company is expecting to continue all business operations during the restructuring without interruption. The restructuring will provide the company a chance to restructure debts and become financially viable again while reorganizing to better position the company for growth in the current economic climate.

“Although this was not our first choice, we believe that the Chapter 11 process will allow us to maximize the value of the Company’s assets,” said Larry Destro, president and CEO of Taco Del Mar. “Taco Del Mar has tremendous traction in its core markets and this process offers an opportunity to grow without the constraints imposed by the current debt burden and threats of litigation. When we emerge from this restructuring, Taco Del Mar will have become a much more competitive brand and a more financially secure investment for our existing and future franchisees.

Mr. Destro added, “I deeply appreciate the dedication and hard work of our employees, franchisees and Master Developers and know that by working together through this process we will emerge stronger than ever.

This restructuring does not involve the franchisee-owned Taco Del Mar store location operations, only the Taco Del Mar Franchising Corp. will restructure.

About Taco Del Mar

Founded in Seattle in 1992 by brothers James and John Schmidt, Taco Del Mar is a quick-service casual restaurant chain inspired by southern Baja, Mexico and coastal beach shacks known for serving some of the tastiest burritos and tacos. Today, Taco Del Mar brings those craved Mexican flavors and experience to more than 225 locations throughout the U.S., Canada and Guam.

“Parents” magazine recently named Taco Del Mar one of America’s Top 10 Best Fast-Casual Family Restaurants. For more information, visit www.parents.com/bestfastrestaurants. “Health” magazine also named Taco Del Mar one of America’s Top 10 Healthiest Fast Food Restaurants. As the fresh, fast alternative to traditional Mexican food, Taco Del Mar takes its ingredients seriously, balancing taste and nutrition. Taco Del Mar’s menu is completely Trans-fat free. The restaurant steams its long-grain rice, does NOT use lard in its beans and uses fresh-made tortillas (with five different choices – spinach, tomato, flour, corn and whole wheat). Taco shells are baked, not fried, and Taco Del Mar’s salsas and guacamole are made with fresh ingredients daily. For more information, including nutritional information and a complete listing of Taco Del Mar locations, visit www.tacodelmar.com.

McDonald’s is profiting from penny-pinching diners.

Before the opening bell Friday, McDonald’s posted better-than-expected fourth-quarter profits driven by sales if its inexpensive fast food

“Our in-demand food and beverages, unparalleled convenience and superior value at every level of our menu enabled us to serve 60 million customers per day during 2009, up 2 million per day over the prior year,” said Chief Executive James A. Skinner.

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