LIMITED SERVICE IDEA HUNT
We are hosting a Quick Service idea hunt on Thursday, October 12th, at 2 p.m. ET. We will have one pitch on MCD, WEN, QSR, YUM, and JACK on the call. We recently removed McDonald's (MCD) as a Long. This presentation will showcase why we removed MCD and highlight some of this industry's pressures ahead of the 3Q23 earnings period.
EVENT DETAILS:
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CMG
Chipotle's New Test Concept - Farmesa Fresh Eatery
Chipotle wants to continue a test with a new concept, Farmesa Fresh Eatery. The test unit at Kitchen United Mix in Santa Monica, California, has been closed. Operations have now been shifted to Chipotle's Cultivate Center in Irvine, California. This move is the next phase in the brand's development process. The goal is to refine operations before launching a standalone Farmesa restaurant. The specifics about the standalone restaurant's location, design, and launch date are yet to be disclosed.
Initially, Farmesa operated as a digital-only concept at the Kitchen United location. Customers could order online, through an app, or kiosk. There was no direct ordering option for customers, but they could collect their orders, eat at the food hall, or opt for takeout/delivery. The menu, curated by James Beard Award-winning chef Nate Appleman, featured a range of health-focused, made-to-order bowls. The offerings were distinct from Chipotle's menu. Some dishes included Ora King salmon with Everything bagel seasoning, roasted broccoli, sprouted cauliflower, marinated roasted golden beets, grilled/crispy chicken, and grilled tri-tip. The price range was approximately $12 to $17.
Chipotle's New Ventures division conceived Farmesa Fresh Eatery. This division also oversaw the now-closed Pizzeria Locale units. In March, Nate Lawton, Chipotle's VP of new ventures, mentioned that the company aimed to explore and invest in new culinary spaces beyond the Mexican grill concept. Chipotle's past ventures into new concepts include the Asian-inspired Shophouse Southeast Asian Kitchen, launched in 2011 and closed in 2017, and a burger concept named Tasty Made, which had a brief run with just one unit. The future of Farmesa is still in the development phase. Nate Lawton emphasized the importance of gathering insights and learning from the initial stages to make informed decisions moving forward.
Burger King's Next Move
In essence, Burger King is making significant changes to cater to the modern, digital consumer while emphasizing unique offerings in the competitive fast-food market.
Burger King is adapting to the changing consumer landscape in 2023, which has shifted towards digital ordering methods like kiosks, mobile orders, and third-party delivery. Tom Curtis, the president of North America for Burger King, highlighted that while older restaurant designs were focused on dine-in and drive-thru sales, the modern consumer is more digitally inclined. To address this, Burger King has introduced a new prototype called "Sizzle." This design aims to cater to the digital consumer and streamline employee experience. This move is part of Burger King's "Reclaim the Flame" initiative, a broader effort to revitalize the brand after facing challenges with sales and profitability.
The first phase of this initiative involved remodeling existing locations. The company plans to remodel 300 to 350 of its 7,000 U.S. restaurants this year. These efforts and a new marketing campaign featuring the "Whopper Whopper" jingle have increased sales for the past five quarters. Another marketing move is the introduction of "Have-sies," allowing customers to choose both fries and onion rings with their combo meals, emphasizing the brand's "You Rule" customization mantra. The company is also prioritizing store remodels and upgrades. The new "Sizzle" prototype is designed to enhance operations, making it easier for employees to manage orders and potentially expanding the use of kiosks. Two new prototypes exist in North Carolina and Las Vegas, but more are expected to be introduced next year.
