More Restaurants Are Embracing Health Conscious Options in Growing Fast-casual Industry

Financialnewsmedia.com News Commentary

PALM BEACH, Florida, March 11, 2020 /PRNewswire/ -- When it comes to restaurants, fast casual has been the growth darling of the industry for almost 20 years, according to Franchise Help an industry publication insider. It said that, while it still accounts for less than 10% of the total market, the number and diversity of fast casual restaurants has been exploding across the country, with an astounding growth of over 500% since 1999! Food Service Industry Expected To Employ 1.7 Million By 2026. Evolving consumer tastes and creative restaurant concepts are the driving forces behind this growth. Increasingly consumers are looking for healthy alternatives and are more dynamic in their tastes - they're looking for more than the typical burger and fries. Another report from QSR magazine, added: "The National Restaurant Association estimated the entire counter-service industry would generate $246.7 billion in food and beverage sales (in 2019), or 3.2 percent higher than sales predictions from the previous year. All that isn't to say, however, the fast-casual landscape is ripe for growth necessarily. It's a more controlled arena heading into 2020. When growth was double-digits 10 years ago, fast casuals—by just being fast casual—were novel enough to produce headlines by simply opening. Crowds would form and products would fly off the counter. And the more trend-centric the concept the better.  Active companies in the markets this week include Muscle Maker, Inc. (NASDAQ: GRIL), Darden Restaurants, Inc. (NYSE: DRI), Chipotle Mexican Grill, Inc. (NYSE: CMG), Starbucks Corporation (NASDAQ: SBUX), Yum! Brands, Inc. (NYSE: YUM).

Another article by QSR looked at healthy alternatives. It said: "Improving the nutritional profile of your menu isn't just the right thing to do—it also makes good business sense. Restaurants play a bigger role in the diets of American children and families now than ever before. And if they use their influence to promote health, they will feed the potential of the next generation… This cultural shift toward quick, convenient dining is fueling a growing epidemic of obesity and chronic disease that threatens the long-term health and vitality of the next generation. Nearly 40 percent of adults and 18.5 percent of children ages 2–19 in the U.S. live with obesity. In addition to obesity, poor diet can lead to inflammation, high cholesterol, and insulin resistance, the triggers for a growing number of chronic diseases including heart disease, diabetes, and even cancer."

Muscle Maker, Inc. (NASDAQ: GRIL) BREAKING NEWS:  MUSCLE MAKER GRILL ANNOUNCES NEW MILITARY VETERAN FRANCHISE PROGRAM  - Muscle Maker, Inc. (NASDAQ: GRIL) owner of Healthy Joe's and Muscle Maker Grill fast casual restaurant brand, promoting a healthy lifestyle by offering nutritious alternatives to traditional dishes, today announced that it has launched a veteran focused discount program to engage retired military members and promote entrepreneurship through franchise ownership. The Company is offering qualified veterans a discount of 50% off the initial franchisee fee and 50% off the first-year royalties, and the company is investigating third party franchise financing opportunities to assist with associated build out costs. This will reduce the initial franchise fee from $35,000 to $17,500 and the program will be available to the first 50 eligible veterans. 

Muscle Maker has been aggressively pursuing a non-traditional growth model that includes a growing, on-base, military presence. The Company has created this veteran focused program to engage and offer a small thanks to those that serve and protect our nation. In addition to our commitment to continue to provide a healthier alternative to those who serve and support the Unites States of America, we are also attempting to provide entrepreneurial opportunities to those that we feel can be excellent ambassadors of the growing brand. Muscle maker currently operates five military locations including Fort Bliss Army Base, two restaurants on Fort Benning Army Base, Fort Sill Army Base and Fort Meade Army Base and will open Camp Elmore Marine Base at the end of the month. The brand also recently announced that it has signed a lease to open on Fort Bragg Army Base, the largest military installation in the world located in North Carolina.

"As our military presence grows, there is an ever-increasing number of enlisted and retired veterans, as well as their extended families, who are building an increasing familiarity with our brand. As we begin to regrow our franchise network, this seemed like an excellent opportunity to give back, and to thank the hard-working men and women of the armed forces, by providing entrepreneurial opportunities." said Michael Roper, Chief Executive Officer of Muscle Maker, Inc."

Founded in 1995, Muscle Maker Grill provides its guests healthier versions of mainstream-favorite dishes that taste great, making it convenient, affordable and enjoyable to eat healthy. Muscle Maker Grill's diverse menu was created for everyone – fitness enthusiasts, those starting their journey to a healthier lifestyle, and people trying to eat better while on-the-go. Muscle Maker Grill does not sacrifice taste to serve healthy options. 

Additional recent developments in the restaurant industry include:

Darden Restaurants, Inc. (NYSE: DRI) recently reported its financial results for the second quarter ended November 24, 2019. Second Quarter 2020 Financial Highlights, Comparisons Versus Same Fiscal Quarter Last Year: Total sales increased 4.2% to $2.06 billion driven by the addition of 37 net new restaurants and a blended same-restaurant sales increase of 2.0%.

Reported diluted net earnings per share from continuing operations decreased 77.2% to $0.21 compared to last year's reported diluted net earnings per share. Adjusted diluted net earnings per share from continuing operations increased 21.7% to $1.12 compared to last year's reported diluted net earnings per share, after excluding $0.91 of adjustments primarily related to the termination of our defined benefit pension plan. The Company repurchased approximately $136 million of its outstanding common stock

Chipotle Mexican Grill, Inc. (NYSE: CMG) recently announced its newest menu item, Queso Blanco, will be available in the U.S. and Canada starting Feb. 27. The new recipe uses 13 real ingredients, including aged Monterey Jack, white cheddar, and serrano, poblano and chipotle peppers, to create a smooth queso with just the right amount of spicy kick. As with all of Chipotle's food, Queso Blanco is made with no artificial flavors, colors or preservatives.

Queso Blanco is the third new menu item that has completed Chipotle's "stage-gate process," which allows the company to test, learn, listen to customer feedback, and iterate extensively before moving forward with a national launch. The new queso recipe was tested in 52 locations across three U.S. markets in 2019.

Starbucks Corporation (NASDAQ: SBUX) and PepsiCo recently announced the launch of new Ready-To-Drink (RTD) Starbucks® Nitro Cold Brew, entering a high growth segment of the RTD Cold Brew category. This is the latest product to join the ranks of successful innovations developed since Starbucks and PepsiCo formed the North American Coffee Partnership (NACP) in 1994, which includes Bottled Cold Brew, Bottled Frappuccino® chilled coffee drink, Starbucks Tripleshot® beverages, Starbucks Doubleshot® beverages, Multi-Serve Iced Coffee and more. Over the past 25+ years, the NACP has grown to more than $2 billion in retail sales, and Starbucks is the leader in the RTD coffee category with 82 percent share.

"Through the NACP, Starbucks and PepsiCo created the RTD Coffee category 25 years ago and have consistently delivered leading innovation to our consumers," said Nik Dhodi, Starbucks senior director, brand management. "To build on the success of Starbucks Nitro Cold Brew in our retail cafes and meet the evolving needs of consumers in the category, we are excited to launch a line of RTD Starbucks Nitro Cold Brew beverages to expand the reach to even more people."

Yum! Brands, Inc. (NYSE: YUM) recently announced that it has acquired Heartstyles, a company offering a world-class leadership development program, to unlock potential and build the capabilities of people who drive the performance for KFC, Pizza Hut and Taco Bell restaurants around the world. Created by Stephen Klemich and Mara Klemich, Ph.D., both specialists in personal and cultural transformation, Heartstyles is an intuitive and practical method for helping people learn how to become the best versions of themselves, lead authentically and build workplace cultures that unlock the potential of teams and deliver strong results. Earlier this year, the Klemich husband-and-wife duo published their heart-led philosophy and method in a book they co-authored, Above the Line: Living and Leading with Heart.

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