Changes at McDonald’s and Reducing Food Waste
15 Min Read By MRM Staff
This edition of MRM News Bites features McDonalds, the Food Waste Reduction Alliance, OpenTable, Ordermark, Hudson Group, Hakkasan Group , Waitr and Checkers, ICV Partners, Restaurant Technologies, Diebold Nixdorf and Alto-Shaam.
Changes at the Top for McDonald's
McDonald's Corporation has made a number of personnel changes as Steve Easterbrook resigned following the Board's determination he violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee. The Board of Directors named Chris Kempczinski, most recently President, McDonald's USA, as President and Chief Executive Officer, effective immediately. Kempczinski has also been elected to the McDonald's Board of Directors. Additionally, Joe Erlinger, most recently President, International Operated Markets, has been appointed President, McDonald's USA, effective immediately.
"The sudden departure of McDonald's CEO Steve Easterbrook is a surprise, but we ultimately believe that newly-appointed CEO Chris Kempczinski is the best positioned executive to lead McDonald's going forward, said. R.J. Hottovy, consumer equity strategist at Morningstar., "Easterbrook, who left McDonald's "following the Board's determination that he violated company policy and demonstrated poor judgment involving a recent consensual relationship with an employee", had been instrumental in the company's turnaround efforts since 2015. This includes a successful global segment reorganization, refranchising more than 4,000 locations, and eliminating $500 million in annual SG&A expenses. During that period, McDonald's also undertook several "velocity growth accelerators," including (1) an Experience of the Future layout, which features a combination of ordering flexibility, customer experience, and a more streamlined menu; (2) mobile ordering and payments; and (3) delivery alternatives.
"When Easterbrook was appointed CEO in January 2015, he was also tasked adding outside perspectives that would help to develop new growth strategies that capitalized on McDonald's key strengths: its brand, its franchisees, and its scale (also the key components behind our wide moat rating). Kempczinski was one of key hires during this period, joining McDonald's in September 2015 as executive vice president of strategy, business development & innovation following leadership positions at Kraft and Pepsi. Kempczinski had been actively involved with the velocity initiatives–including digital and delivery–and worked with franchisees to adopt these platforms since becoming the head of McDonald's U.S. in January 2017. We also believe Kempczinski's focus on menu innovation, restaurant operations, and international expertise (from his time at Kraft) make him a strong CEO candidate.
There is no change to our $215 fair value estimate, wide-moat rating, or Standard stewardship rating following the CEO transition, and see shares as modestly undervalued," Hottovy noted.
While a high-profile leadership change tends to raise natural questions about leadership stability at a company, we believe that McDonald's under Kempczinski will be well positioned to stay ahead of its industry peers through its latest menu and technology initiatives, including an opportunity to redefine the drive-thru experience for the category through the recently acquired Dynamic Yield (predictive ordering) and Apprente (voice), which offer both ticket and throughput benefits. While we'd prefer a bit wider margin of safety at current levels, we'd encourage investors to take advantage of any post-transition weakness in the stock."
"Chris takes the reins of this great company at a time of strong, sustained performance, and the Board has every confidence that he is the best leader to set the vision and drive the plans for the Company's continued success. He has the right mix of skills and experience to lead us forward having run our U.S. business, where franchisees are delivering strong financial and operational results, and overseen global strategy, business development and innovation. In particular, Chris was instrumental in the development of the Company's strategic plan, which has enabled global growth and leadership, and has overseen the most comprehensive transformation of the U.S. business in McDonald's history," said Enrique Hernandez Jr., Chairman of McDonald's Board of Directors.
Kempczinski said, "I'm thrilled to be leading this incredible company. Working alongside our talented team, our Board, our franchisees and suppliers, I am committed to upholding our rich heritage of serving our customers and driving value for our shareholders and other stakeholders. As one of the world's leading brands, McDonald's makes a difference in the lives of people every day. We have a responsibility not only to serve great food, but to make it responsibly and to enrich the communities in which we operate. I am energized by this challenge and look forward to guiding McDonald's continued success."
"Joe is a respected leader who is returning to the U.S. after working around the world for McDonald's," said Kempczinski. "He has a proven track record of driving strong results through collaboration with franchisees and a relentless focus on the customer. I am proud and excited that one of my first moves as CEO is to announce his appointment, and am confident in all he will bring to our U.S. business."
In his new role, Erlinger will be responsible for the business operations of approximately 14,000 McDonald's restaurants in the United States, reporting to Kempczinski.
"Our U.S. business is the heartbeat of McDonald's," said Erlinger. "I look forward to working with our franchisees to build upon the transformational progress in our largest market. With a talented team that is committed to running great restaurants, we have tremendous momentum to deliver on our brand promise to all of our customers."
Reducing Food Waste
The Food Waste Reduction Alliance – founded by the Food Marketing Institute (FMI), Grocery Manufacturers Association (GMA) and National Restaurant Association – today announced a formal agreement with the U.S. Department of Agriculture (USDA), the U.S. Environmental Protection Agency (EPA) and the U.S. Food and Drug Administration (FDA) to reduce food loss and waste through industry and agency-specific actions.
As industry leaders and representatives of vital links in the supply chain, the alliance seeks to reduce the amount of food waste generated, increase the amount of safe, nutritious food donated to those in need and divert unavoidable food waste from landfills. FWRA’s mission and participation in this memorandum of understanding is intended to further the interagency Winning on Reducing Food Waste Initiative and build upon strategic priority areas aimed at:
- Educating and engaging the food manufacturing, retail, restaurant and food service industries to reduce food waste, including strategies to prevent, recover and recycle excess food.
- Informing stakeholders of the food waste reduction recognition programs currently available at each respective agency.
- Sharing best practices on successful, creative and innovative solutions to reduce wasted food across industry sectors.
- Increasing industry awareness of the Bill Emerson Good Samaritan Act (“Act”) so as to encourage safe and effective food donation and recovery.
FMI President and CEO Leslie Sarasin said, “FWRA was founded with the conviction that the entire supply chain has a role to play in reducing food waste; food retailers are committed to fulfilling their responsibility in addressing this issue of such tremendous impact for the communities we serve. Despite the important progress that has been made in increasing donations and diverting waste from landfill, we must continue to learn from each other to forge new alliances and create and implement best practices. Today’s formal agreement with our government agency partners represents a significant cross-functional commitment to pursue and amplify policies that encourage environmental, societal and business innovation.”
“The consumer packaged goods (CPG) industry is committed to reducing the environmental footprint of our products – from ingredients to packaging,” said GMA President and CEO Geoff Freeman. “Food waste remains the single largest category of material in U.S. landfills. By collaborating with FMI, the National Restaurant Association and these federal agencies, the CPG industry can better share best practices to reducing waste and find innovative, scalable solutions to keep valuable material like food and packaging out of landfills. We are proud to support the Food Waste Reduction Alliance and look forward to working with our partners to putting an end to food waste.”
“The National Restaurant Association is proud to be a part of this collaboration between the EPA, FDA, USDA, and the Food Waste Reduction Alliance,” said Dawn Sweeney, President & CEO of the National Restaurant Association. “The restaurant industry is one of opportunity, and reducing food waste provides our members with more opportunities to serve our communities and our customers. We look forward to working with our partners to share best practices on food waste reduction and, with greater clarity on liability protections for food donation, make it easier for owners and operators to make food donations in their communities. By reducing food waste, we can serve those in need today and set the table for success tomorrow.”
FWRA will continue to strategically focus on bringing industry innovation to the forefront through case studies and current industry best practices. Since 2011, FWRA has released insights, model practices and emerging solutions compiled from more than 40 FWRA member companies and expert partners from the hunger relief and waste management sectors.
OpenTable Adds Features
OpenTable added new features designed to address one of the biggest challenges for restaurants and managers: control over table turns. According to OpenTable, the time that a restaurant expects a table to be occupied can vary from 45 minutes to four hours making it difficult for floor managers to optimize their seating.
“Controlling the pace of the dining room – how often tables turn over and when to fill them again – has significant financial impact for restaurants,” said Jon Morin, OpenTable’s VP of Product Management. “We’ve designed two new features that react to incoming reservations in real time and which adapt to operating goals. 70 percent of our most popular restaurants use these turn and flow controls to run and grow their business.”
Flexible turn controls allow restaurateurs and their staff to define a minimum number of times a table will turn over by party size or table and only offer booking times that help reach that goal. Customizable flow controls assist with pacing tables to help the kitchen from getting backed up and keep staff’s heads above water when the restaurant is at its busiest. Restaurant management can set these features, and then forget them. This frees up time to focus on guests, while the features do the hard work on their behalf.
“We’ve really enjoyed testing and experimenting with OpenTable’s new controls,” said Jonás J. Millán, Restaurateur and Owner of the Juvia Group. “The turn controls keeps moving, adjusting and adapting to how reservations come in. The feature gives you the power to control and increase your capacity in a controlled environment without jeopardizing the flow of the dining room.”
Ordermark Expands in Denver
Ordermark is expanding its Denver Tech Center facility into a new office in Greenwood Village.
Ordermark has expanded its Metro Denver office to a 6,025 square foot space in the Denver Tech Center. The new Ordermark Greenwood Village office at 6200 South Syracuse Way is Leadership in Energy and Environmental Design (LEED) certified and enables the company to expand its Denver-area head-count by more than 500% in the Denver Tech Center. Ordermark also recently announced an expansion of its Southern California office headquarters in Playa Vista.
“Ordermark’s growth is accelerating and we’re proud to bring more jobs to the metro Denver market; home to so many with deep roots in technology and the restaurant space,” said Paul Allen, Chief Strategy Officer of Ordermark. “With strong growth and new funding from top investors, we’re planning for significant expansion.”
As previously announced, Ordermark recently completed a successful $18M Series B funding round led by Boulder-based Foundry Group, as well as all of its Series A investors including TenOneTen Ventures, Vertical Venture Partners, Mucker Capital, Act One Ventures, and Nosara Capital. The company also announced subsequently a new 30,000 square foot facility for its Los Angeles headquarters in Playa Vista, expanding its Southern California headcount capacity by 1000 percent.
Hudson Group to Acquire OHM
Hudson Group signed an agreement to acquire a controlling stake in the assets of OHM Concession Group LLC (OHM), a food and beverage concessions operator in North America, top photo. The addition of OHM adds notable food and beverage options to Hudson’s existing concessions catalog and complements Hudson’s existing footprint in the Quick Service Restaurant space.
The acquisition of OHM expands upon its established quick service and café concepts of which Hudson operates approximately 50 units to date across the United States and Canada. OHM adds approximately 60 units to Hudson’s existing food concessions base and allows Hudson to infuse new markets with its unparalleled travel expertise, such as Albany International Airport and Pensacola International Airport. Well-known OHM food and beverage (F&B) concepts such as &pizza, the Kitchen by Wolfgang Puck, the Bracket Room Sports Lounge, Chick-fil-A, Currito, Dunkin Donuts, Jamba Juice, Einstein Bros. Bagels and more will provide travelers with a variety of culinary options in travel hubs across North America and further showcase Hudson’s commitment to savvy jetsetters as The Traveler’s Best Friend.
“In 2013, I was fortunate to partner with the Hudson team on the retail program at my home airport, St. Louis Lambert International,” said Milan Patel, President & CEO of OHM. “Today, I am extremely proud that my relationship with the Hudson family has blossomed into this opportunity. The Hudson team represents the same principles my uncle and father, the founders of OHM, taught me: focus on quality, deliver excellence to our guests and provide our associates with a great place to work. On behalf of over 900 OHM associates, we look forward to an exciting and bright future with the Hudson team.”
“This acquisition is a pivotal step in accelerating Hudson’s growth strategy within the $6 billion North American food & beverage airport concessions market. It expands our existing stake and adds new capabilities, including full-service, fast casual, sports restaurants and fine dining locations to our portfolio, ultimately bringing unmatched offerings to suit all types of travelers’ needs,” said Roger Fordyce, Hudson Group CEO. “The addition of OHM to the Hudson family strengthens our presence in travel concessions and further enhances our ability to compete for additional contracts in existing and new airports. Under Milan’s leadership, OHM has an impressive track record of growth and a strong reputation in the industry. Today marks the beginning of the next chapter in OHM and Hudson’s growth story.”
OHM operates restaurants at 13 airports across the U.S., including Boston, St. Louis, Washington DC, Greenville, Orlando, and most recently won contracts in Salt Lake City and Indianapolis. In 2018, OHM generated $62 million of revenue. Since 2013, OHM has been one of the fastest growing companies in Airport F&B Concessions. The company grew from 10 F&B locations at two airports in 2013 to nearly 60 F&B locations at 13 airports by the end of 2018. The company has been under the same family ownership for its 20+ year history. OHM has received industry awards for excellence in service and operations, including being named the best minority-owned business at the 2016 and 2018 Airport Experience News Conference.
The completion of this agreement is subject to customary closing conditions. The transaction is expected to be completed in Q4 2019 or Q1 2020.
Action Against Hunger
Hakkasan Group today launched a worldwide charitable contribution campaign supporting Action Against Hunger, the world’s hunger specialist and leader in a global movement that aims to end life-threatening hunger for good within our lifetimes. The new initiative will help to treat and prevent hunger in almost 50 countries, demonstrating the hospitality company’s commitment to empowering the global community by engaging employees and guests through continued social responsibility efforts.
Through the holiday season to December 31, 2019, guests will be able to add donations on their receipts when dining at restaurants across Hakkasan Group’s portfolio, including the award-winning Cantonese restaurant brand Hakkasan, modern Japanese eatery Sake no Hana and beachside concept Herringbone. All guest donations will go to Action Against Hunger.
“We are honored to join Action Against Hunger in the battle against world hunger,” said Grant MacPherson, senior vice president of food & beverage. “As we enter the festive season, it is more important than ever to remember that access to nutritious food is not a luxury, but a basic human right and necessity. Through this campaign, we hope to give back to the global community and make a positive change in the world through collective action.”
“Action Against Hunger is thrilled to have Hakkasan Group’s support. Together, we can help more children have a brighter future,” said Action Against Hunger’s CEO, Dr. Charles Owubah.
The Hakkasan Group restaurants participating in this charitable campaign include:
- Hanway Place, London, United Kingdom
- Mayfair, London, United Kingdom
- Las Vegas, Nevada, USA
- Miami, Florida, USA
- New York, New York, USA
- San Francisco, California, USA
- Shanghai, China
- Soho, London, United Kingdom
- City, London, United Kingdom
- Houston, Texas, USA
Sake no Hana
- London, United Kingdom
- Oslo, Norway
- Waikiki, Hawaii, USA
- Santa Monica, California, USA
- La Jolla, California, USA
- San Diego, California, USA
- Las Vegas, California, USA
Waitr Teams with Checkers
Waitr is partnering with Checkers & Rally's Restaurants, Inc. Together with recently acquired food delivery company, Bite Squad, Waitr will bring customers' favorite classic menu items to the comforts of their home.
"We're thrilled to add Checkers & Rally's to our growing list of national restaurant partners," said Zach Morgan, Director of National Accounts at Waitr. "We want to provide our customers with a wide variety of options, so they can always have the food they're craving delivered from their favorite restaurants."
Waitr and Bite Squad will soon deliver from more than 200 Checkers & Rally's locations, beginning with 54 Bite Squad markets across Florida, Arkansas and Ohio, available now.
"We are excited to partner with Bite Squad and Waitr, bringing their services to many of our company and franchise locations in 2019 and 2020," said Checkers & Rally's Director of eCommerce Josh Buchmann. "This partnership has made it possible for us to scale quickly, and will play a strategic role in building strong delivery sales for our Gulf Coast markets, as well as many other markets across the country."
Checkers & Rally's are the apps' first restaurant partners to fully utilize the digital food ordering platform Olo Rails, which ensures a seamless operator experience from order to delivery. Waitr announced its partnership with the platform in August 2019.
ICV Invests in JK&T Wings
ICV Partners, LLC made a significant investment in JK&T Wings, a leading franchisee of Buffalo Wild Wings (“BWW”), in partnership with management.
Buffalo Wild Wings, founded in 1982, is the largest sports bar brand in the United States. Globally, Buffalo Wild Wings has more than 1,200 restaurants in 10 countries. BWW was acquired in February of 2018 by Inspire Brands (which also owns Arby’s, Sonic and Jimmy John’s). JK&T owns 42 BWW restaurants located primarily in Michigan, with additional locations in Massachusetts and Louisiana. Visit BuffaloWildWings.com.
Kent Ward, Chief Executive Officer of JK&T and Brian Carmody, President will continue as investors in JK&T. Mr. Ward said, “ICV has the financial and operational resources to help us grow the company and, importantly, they understand and share our passion for the BWW brand whose quality food combined with customer experience are the cornerstone of our success. We are very excited by the new leadership initiatives that Inspire is incorporating into this iconic brand and we look forward to having ICV as partners to help drive our growth and enhanced performance.”
“This purchase marks an important step in the strategic plan laid out by ICV and management to create a powerful and even more successful Buffalo Wild Wings platform. We are very excited to be investing to help grow the Buffalo Wild Wings’ brand,” said Ira Moreland, Managing Director of ICV. “Kent, Brian, and their team have built a strong and profitable company and we look forward to partnering with them and their executive team to grow the company and enhance their operations.”
Future improvements by the company include plans to remodel certain facilities, target additional store openings, as well as identify potential acquisitions of other franchisees.
Restaurant Technologies Acquires Grease LockTM Disposable Filter Pads
Restaurant Technologies acquired a new product: Grease LockTM, disposable grease filter pads that simplify hood maintenance and help increase fire safety in commercial kitchens.
“Grease LockTM filter pads are effective at trapping grease and are easy to use, which makes them attractive in all types of commercial kitchens,” said Jeff Kiesel, CEO of Restaurant Technologies. “This acquisition is key to our growth strategy. We are at a key moment in the growth of this company. This acquisition represents just one of a series of planned investments.”
“Adding Grease LockTM disposable filter pads to Restaurant Technologies’ portfolio of products and services allows the company to serve a broader customer base with a new fire prevention solution,” Kiesel said.
Grease LockTM is a state-of-the-art patented product that captures up to 98 percent of airborne kitchen grease before it enters a commercial kitchen’s exhaust system. The filter pads and metal frames replace traditional baffles, reducing fire risk and the cleaning frequency. Grease LockTM filter pads and metal frames are shipped directly to restaurants and are easy to install and use.
This is a strategic acquisition because Grease LockTM filter pads can be used alone or as a complement to the Restaurant Technologies’ AutoMist® automated exhaust-cleaning system. “The addition of Grease LockTM further positions us to help our customers create safer, smarter kitchens in their foodservice operations,” said Kiesel. Restaurant Technologies is known for its automated cooking oil management and grease-management solutions used in commercial cooking settings such as restaurants, groceries, hotels, universities, hospitals and casinos throughout the United States.
Grease LockTM products are available in standard industry sizes. Restaurant Technologies is in the process of launching this new technology across the country. The sale has been finalized, though specifics of the transaction were not disclosed.
Dave & Buster's Chooses DBD Kiosks
Dave & Buster’s will install Diebold Nixdorf’s self-service kiosk solution at locations nationwide.
Built around Diebold Nixdorf’s newest K-two interactive kiosk, this solution is designed to meet Dave & Buster’s strategy of creating a more enhanced, efficient and engaging experience for consumers while they “Eat, Drink, Play and Watch.” The highly-flexible K-two features a 32” monitor and a card dispenser that allows newly-purchased Dave & Buster’s Power Cards® for game play to be dispensed immediately, or existing Power Cards to be reloaded, promoting instant consumer satisfaction in a convenient, on-demand way.
The company will install, network and monitor the systems to provide remote management capabilities allowing for quick and easy upgrades of new software and functionality. With proactive monitoring and the power of real-time information, Dave & Buster’s can continue to delight and engage consumers by providing a more streamlined user experience.
JP Hurtado, CIO at Dave & Busters, said: “After completing a successful pilot, we are excited to partner with Diebold Nixdorf to deliver a high-quality solution to our high-volume locations across the country. The new kiosk platform provides an improved user experience. We are excited about growing new channels within the platform like food ordering and other self-service offerings.”
Patrick O’Donnell, vice president of Retail, Americas, at Diebold Nixdorf, said: “The Diebold Nixdorf team is extremely proud to be part of this unique partnership and to offer Dave & Buster’s the most flexible, self-service solution in the retail industry. This technology provides their consumers with additional services, and can be easily upgraded with new functionality to further enhance their experience.”
New Multi-Cooks from Alto-Shaam
Designed intentionally simple, the latest H Series Vector Multi-Cook Ovens from Alto-Shaam are available to order. The new ovens feature an enhanced user-friendly interface, advanced controls and a sleek design—along with custom exterior color options.
“We’re constantly looking for ways to meet the needs of foodservice operators worldwide,” said Jeff McMahon, senior director of product management. “This is only the beginning of improvements aimed to better serve our customers and align with the latest industry trends.”
The compact and ventless Vector H Series countertop models are designed for foodservice operations with limited space. The new model includes Alto-Shaam’s exclusive Structured Air Technology®, featuring four ovens in one. With independent oven chambers, operators can simultaneously cook a variety of menu items with zero flavor transfer.
With a simple design and controls, the new Vector H Series Multi-Cook ovens significantly reduce training time. The ovens feature multi-step, programmable recipes to ensure menu consistency in between shift changes. Operators can upload their own images, categorize food items and filter recipes for seamless cooking at their fingertips. Additionally, enhanced diagnostics keep foodservice operations up and running with easily accessible oven status updates and service details.