Viewpoint November 2007
It’s Really Not So Bad….Or Is It?
by Bob Gershberg
Managing Partner, Dick Wray Executive Search
It is undoubtedly a good thing most of us attending the Restaurant Finance & Development
Conference in Las Vegas arrived via airliner and had to clear TSA scrutiny prior to departure. I
fear if we had handguns many of us might have taken our own lives following the morning
economic presentations. Thank heavens John Hamburger had the foresight to book Dennis
Miller as the lunch speaker to bring levity to the situation.
Spiraling commodities costs, increasing labor costs, oil at $96 per barrel, a housing market which continues to show signs of further decline – Is it any wonder we cringe a bit as we approach 2008? With the American dollar at comparative lows and international product demand evergrowing, we are wise to recognize these trends are not going to improve any time soon. And did I neglect to mention consumer spending is slowing?
The good news, however is that the restaurant economy continues to expand. Sales for this year will reach a record $537 billion, up 5% from last year. The best operators will continue to see profitability and those who need to tweak or revamp in order to remain competitive will do so. Just glance below at this month’s financials and you will note some of our industry brethren are still, or in some cases once again kicking butt! BK is king again with a 23% increase in profit for first quarter. Tim Horton’s boasts a reported a 30-percent year-over year jump in third-quarter profit. Buffalo Wild Wings Inc. reported a 21-percent spike in third-quarter net income over a year earlier. Higher customer traffic and the addition of 28 more branches helped Chipotle Mexican Grill, now comprising 670 namesake burrito restaurants, boost third-quarter revenue by nearly 36 percent, yielding a nearly 75-percent leap in net profit for the three months ended Sept. 30. McDonald’s Corp. reported a 27 percent jump in third-quarter earnings, compared with yearearlier results, crediting "convenience" and strong sales of coffee, breakfast, burgers and snack wraps. Perhaps it isn’t quite so bad.
I had the pleasure of lunching with one of our industry’s foremost leaders recently, Jon Luther, Chairman and CEO of Dunkin’ Brands. As we discussed the challenges facing our industry as we approach 2008, Jon stated, “I learned a long time ago, when you are facing challenging times focus on operations, operations services, operations excellence. It will get you through – all the time!” Jon has always been the master of bringing complex issues to their simplest form.
All the best,
Bob Gershberg |Managing Partner|
bob.gershberg@dickwray.com
(888) 875-9993 ext 102
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