Blog #5: Influential Leaders

Influential leaders in the restaurant industry are Howard Schultz and Donald Thompson. They each have impacted the industry greatly and changed the system with their innovative ideas. I believe that in order to become  successful in the restaurant industry, one needs persistence, knowledge, and most importantly a vivid imagination.

Howard Schultz, Chairman and CEO of Starbucks Corporation, was the man who brought the unique and leisured coffee bars to the United States. His great idea started when he travelled from New York to Seattle to visit  a store called “Starbucks” that had been buying many of the Hammarplast Swedish drip coffeemakers he was selling. Schultz  saw much opportunity within this business and after a year finally convinced the Starbucks owner to hire him. He wanted this coffee business to mimic a “European way” of drinking coffee, where it was seen as a leisurely, social gathering, but the owner resisted many of Schultzes ideas. Schultz quit and created his own coffee bar which soon became very successful. Finally, a year later, Schultz bought Starbucks for $3.8 million dollars [Myprimetime.com 2001]. I believe that Howards Schultz became so successful because he had a bright and detailed vision of what he believed consumers yearned for. He saw the future restaurant, Starbucks, as not just a place to buy coffee, but yet a place where people could come together, socialize, and be in a relaxing environment amidst their busy lifestyles.

Donald Thompson, President and CEO of McDonalds Corporation,  originally started his career on the technical side of the business. With his fantastic people skills and work ethics, he later  moved up in the ranks and held other key positions. In support of McDonalds success, he was noted for creating three global growth priorities, which included, “ to optimize our menu, modernize the customer experience and broaden restaurant accessibility [Don thompson: 2012].” Today, Thompson is known as one of the highest ranked African Americans in the restaurant Industry [Answers.com]. I believe Thompson had come so far due to his amazing leadership qualities. He displays the importance of dedication, collaboration, and even perseverance. Thompson had travelled up  the McDonald’s hierarchy, which proves how one can become successful in the industry. This is a quintessential example portraying how the restaurant industry provides much opportunity for those who are determined and willing to take advantage of all that it offers.

Works Cited:


Myprimetime.com. (2001). Retrieved from http://www.myprimetime.com/work/ge/schultzbio/

Answers.com. (n.d.). Retrieved from http://www.answers.com/topic/don-thompson

Don thompson: president and chief executive officer. (2012, July). Retrieved from http://aboutmcdonalds.com/mcd/our_company/leadership/don_thompson.html

Blog #5: Innovation in the Restaurant Industry

           Innovation is what sets companies apart, and without it there would be no groundbreaking products in business or great ideas that launch a company to the top. However, different industries have to find different ways to innovate their products and company. For the restaurant industry, innovation, as described by Jim Carroll, is all about both big innovation and fast innovation (Carroll 2009). Big innovation is the launch of new products and services, and fast innovation is the ability of the company to respond to rapidly changing market trends, such as consumer and economic trends, and changing products. (Carroll 2009). For the restaurant industry, the most important of these innovative ideas is fast innovation. Since changes in food preferences and recessions are a constant part of the market, a company’s success relies on its capability to bring in new ideas to counter these changes in the market. Recently though, there have been more exact ways for innovation, which Mr, Carroll talks about in his keynote address at the YUM! Brands 2009 global leadership meeting which still exists right now.

            The first big way of innovation that Mr. Carroll talks about is expansion into the global market. According to Jim Carroll, chain restaurants made up 1% of total food services in China and 2% for Europe compared to 50% in the USA (Carroll 2009). If companies develop ways to penetrate these markets, they would see huge success and growth in size and sales. This is seen by Starbucks, which has been steadily expanding around the globe in areas such as china, which has brought them a great increase in their revenue (Gertner 2012). Another way innovation is important to the restaurant industry is being able to adjust to the change in consumer choice (Carroll 2009). Consumers are the most vital part of any industry, and if their preferences change then the industry has to find ways to adjust to these changes. For the restaurant industry, consumers want more healthy food options and it is up to the restaurants to create new products and menus to fit these new wants. Starbucks is one of the companies that have found success through innovation in relation to changing customer preferences. “Over the past two years, Starbucks has collected a trove of consumer research to develop what executives there call a ‘sensory map’ map” (Gertner 2012). Using innovative techniques to go to the customer and see what they want, Starbucks has been able to capitalize on the changing preferences of its consumers. Yet, another chance for innovation in this industry is being able to adjust to social desires of the consumers (Carroll 2009). This is also how Starbucks has been able to have its recent success. CEO, Mr. Schultz, has increased Starbucks’ public reputation through community events such as Starbucks’ Jobs for U.S.A. program, which gives out wristbands for fund raising and raising job creation incentives (Gertner 2012). Starbucks is just one company that has been able to thrive in this new age of innovation for the restaurant industry, and as new innovative opportunities arise, many companies will look for ways to capitalize.  

Carroll, Jim. (2009) Recent Keynote: innovating for growth in the restaurant industry. Retrieved from: http://www.jimcarroll.com/2009/02/recent-keynote-innovating-for-growth-in-the-restaurant-industry/#.UKkFMSqF_hI

Gertner, Jon. (2012). The World’s 50 Most Innovative Companies. Retrieved from: http://www.fastcompany.com/most-innovative-companies/2012/starbucks

Blog #4: Accounting

             Panera Bread is growing quickly and increasing its profit swiftly and more fiercely every quarter. In fact, according to a recent Wall Street Journal, Panera has not reported a decline in profit since the beginning of 2008 (Rubin). This is exceptional because this is when the recession started and many other companies saw an extreme decrease in profit. CBS reported that the Dow Jones U.S. Restaurants and Bars index dropped 13 percent (CBS News). Despite its competitors though, Panera continued with growth through the recession; even still now, coming out of the recession,  their revenue continues to increase past expectation “The restaurant chain’s total revenue escalated 17% year over year to $529.3 million in the third quarter and beat the Zacks Consensus Estimate $522.0 million” (Yahoo Finance). Their EPS has increased with third quarter 2012 report showing a $1.24 value in earnings per share, when the estimate was $1.19.

              However, this restaurant is not the only one who has had success within the industry. McDonald’s and Darden Restaurants also saw some growth during the recession. McDonald’s had a 5 percent increase in shares while Darden Restaurants rose 1 percent (CBS News). This is a small increase but considering the impact the recession had on many restaurants, that is an accomplishment.  In recent days though, Starbucks just reported an 11 percent increase in their fourth quarter EPS with an expected revenue growth between 10-13 percent (Standard and Poor). These are restaurants who have partaken in good news along with Panera Bread, and I also feel that these restaurants are the leaders among the restaurant industry.  

Work Cited

CBS News. (2009, February 11). Recession took a bite of restaurant sales. Retrieved from http://www.cbsnews.com/2100-500395_162-4693779.html

Rubin, B. (2012, October 23). Panera bread 3rd quarter net up 27% on stronger same store sales. Wall Street Journal. Retrieved from  http://online.wsj.com/article/BT-CO-20121023-714934.html?mod=WSJ_qtnews_wsjlatest

Standard and Poor. (2012). Marketmovers,starbucks corpor **** up 4. Retrieved from http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantage/cp/companyIndustryNews.do

Yahoo Finance. (2012, October 24). Panera tops, ups view. Retrieved from http://finance.yahoo.com/news/panera-tops-ups-view-122917469.html;_ylt=A2KJ3CaRBptQ_QsANQSTmYlQ

Blog #4: Darden Restaurants Inc. Financial Statements

            Darden Restaurants Inc. released its annual financial report for the fiscal year ending on May 29^th, 2012.  Darden reported a net profit of $475.5 million after calculating expenses and tax for the year (Darden Restaurants Inc. [DRI], 2012).  The same reports from 2011 and 2010 showed net earnings to be $476.3 million and $404.5 respectively (DRI, 2012).  This shows that Darden Restaurants had major growth in their fiscal year ending in 2011, but was unable to sustain that profit growth through the fiscal year ending in 2012.  According to the annual report (2012), Darden earned $7,998.7 million in total sales in 2012.  In 2011, Darden Restaurants had a total revenue of $7,500.2 million.  This growth in total revenue was accompanied by a slightly larger growth in total costs, causing the net earnings in 2012 to be smaller than in 2011. Even though the company did not increase their profits between 2011 and 2012, they were able to increase their earnings per share.  In 2011 the reported basic earnings per share was $3.48, and in 2012 the same value was $3.65 (DRI, 2012).  This shows that although they were only able to create a similar amount of profit as the year before, Darden Restaurants was able to increase the value for each individual investor.

            The recession of 2008-2009 did not seem to have an affect Darden Restaurants.  The company had steady profit growth from 2004 to 2006, as shown in figure 1 (DRI, 2006).  The company did have a major dip during the fiscal year ending in 2007.  As shown in both figure 1 and figure 2, Darden went on to continue increasing either their net earnings or their earnings per share until 2012.  Many other restaurants stayed steady or took a hit during the recession (DRI, 2009) (DRI, 2012).  It seems that since Darden was able to maintain profit growth through the recession, they have an advantage over other companies in the industry.

Figure 1. DRI annual profit. This figure show the annual profit of Darden Restaurants Inc. in dollars. Created using multiple sources.

 

Figure 2. DRI annual basic earnings per share. This figure shows the basic earnings per share of Darden Restaurants Inc. in dollars. Created using data from multiple sources.

Cited Sources:

Darden Restaurants Inc. (2006). 2006 annual report. Retrieved from: http://investor.darden.com/files/doc_downloads/Annual_Report_2006.pdf

Darden Restaurants Inc. (2009). 2009 annual report. Retrieved from: http://investor.darden.com/files/doc_downloads/2009_Annual_Report.pdf

Darden Restaurants Inc. (2012). 2012 annual report. Retrieved from: http://investor.darden.com/files/doc_financials/Darden_2012AR%5B1%5D.pdf

Blog #4: McDonald's and the Recession of 2008

            It all makes sense: when times get tough, like during the recession of 2008, people want to spend less because their money is suddenly more valuable.  When many restaurant businesses—big and small alike—began to fail during this time, fast food restaurants like Wendy’s, Burger King, and (most notably) McDonald’s began to thrive (Steverman 2010).  In fact, this epic franchise grew more in 2008 than it had in 2006 and 2007.  After all, who can turn away a Sausage McMuffin for only one dollar?  And throw in a coffee and hash brown for only $1.50 more?  Hardly anyone.          

            Because people are so concerned with making money and wasting no time, especially during the recession of 2008, McDonald’s greatly excelled because McDonald’s sold time—the scarcest resource at that time—very cheaply, said John Osborne, head of Osborn Capital Management (Dahle 2009).

            As Stephanie Dahle’s article in Forbes magazine stated, “McDonald’’s loves your recession” (2009).  This statement makes a lot of sense, for in the early to mid-1990’s, McDonald’s sales declined (Dahles 2009).  This was clearly a time of economic boom, and just one decade after came the bust; a time when “Americans began to trade down [food quality] with a  vengeance” (Gross 2009).  However, as many firms started to slash their prices, McDonald’s did just the opposite (Gross 2009).  Along with offering their usual coupons, McDonald’s really took off because while many companies began slashing their prices and quality alike, McDonald’s started to promote “higher margin [goods]” to those who were adjusting from a life of pricier meals to those of… McDonald’s (Gross 2009).

            Overall, the economic recession that plagued so many other restaurant companies and franchises did nothing but help that of McDonald’s.  People did not have the time or money to sacrifice their spending on fancier places like Olive Garden or the like.  As the economy reaches its stages of recovery however, McDonald’s could be in for a rude awakening.

Works Cited:

Gross, Daniel (2009 Aug, 5).  Who Won the Recession? Retrieved from http://www.slate.com/articles/business/moneybox/2009/08/who_won_the_recession.html

Dahle, Stephanie (2009 Feb, 17).  McDonald’s Loves Your Recession.  Retrieved from http://www.forbes.com/2009/02/17/mcdonalds-recession-stock-intelligent-investing_0217_mcdonalds.html#

Steverman, Ben (2010 Mar, 8). McDonald’s: Winning a Hard-Times, Fast Food Fight. Retrieved from http://www.businessweek.com/bwdaily/dnflash/content/mar2010/db2010038_123647.htm

Blog #4: Profit, Loss, and Revenue in regards to Starbucks

Over the past four years, from 2009-2012, Starbucks has an incredible increase in their profit. According to their income statement-all numbers pertaining to income statement is in thousands-in 2009 they had a net income of 390,800 (Yahoo Finance, income statement). During their financial period in 2010, they increased their net income to 945,600 (Yahoo Finance, income statement). Starbucks was able to increase their profits again in 2011 with a net income of 1,245,700 (Yahoo Finance, income statement). There profits have already surpassed that number in the third quarter of 2012 as their net income as of July 1, 2012 is already 1,383,800. (Forbes).  Not only is this increase in net income very impressive, but so is their revenue in regards to their losses. The reason that Starbucks has been able to have such increase is because even though their losses have increased, the company has found ways to increase their revenue by a higher percentage.  The profit of Starbucks has also affected the company’s stock price. From 2009 to today, Starbucks’ stock has increased from a mere 7.83 to a 51.44 showing investor confidence (Yahoo Finance, chart). This portrays how effective increasing profit can be for a company, and especially for something as important as stocks             

           

http://data.cnbc.com/quotes/SBUX/tab/5

    As portrayed above is the graph that shows the earning per share for Starbucks. They have not been able to beat estimates in 2012, which is shown by a green arrow. However, the company has been increasing in EPS since the second quarter of 2012 and is estimated to continue this increase into 2013. Another positive for Starbucks’ earning report was that it was called the shot that cripples the bear these by Oppenhiemer (Andrejczk). Starbucks has the possibility to increase both their profits and EPS over their next fiscal year, just as they did this one.

Work Cited:
 

Andrejczak, M.( November 2, 2012). Starbucks bulls feeling vindicated after latest results. Retrieved from: http://blogs.marketwatch.com/thetell/2012/11/02/starbucks-bulls-feeling-vindicated-after-latest-results/

Cnbc Data. (2012) Starbucks Corp. Retrieved from: http://data.cnbc.com/quotes/SBUX/tab/5

Yahoo Finance.(2012). Starbucks Corporation (SBUX). Retrieved from: http://finance.yahoo.com/q/is?s=SBUX

Forbes(2012). Starbucks Corp. Retrieved from: http://finapps.forbes.com/finapps/jsp/finance/compinfo/IncomeStatement.jsp?tkr=SBUX

Blog #4: Accounting

Chipotle Mexican Grill is not only a healthy option for customers, but it also offers a low-priced and fast casual experience. It has had one of the highest estimated growth rates at 5.4%, which is very similar to that of the restaurant chain Panera Bread [U.S Restaurant’s 3rd Quarter..WSJ]. Chipotle Mexican Grill’s five year revenue trend and yearly net income has substantially increased,  therefore proving the company’s overall success [CMG Annual Income Statement 2012]

Chipotle Mexican Grill’s balance sheets had been negatively affected during the 2008-2009 recession, which is similar to that of other players in the industry such as Panera Bread [Panera Bread 3rd-Quarter]. During the recession period, Chipotle and Panera Bread had experienced loss in profit compared to recent years. When observing the stock prices of these restaurants, a trend appears in 2008-2009 where the prices had significantly shown to decrease [Stock:Chipotle Mexican Grill 2012]. Although Chipotle and Panera had experienced loss during the recession, they are still very much upcoming restaurants in the industry because they present the new fast-casual trend. I believe that although growth had declined during the recession years, there is still much opportunity within these restaurants for profit because they offer low prices, fast service and a casual dining experience. Therefore, I found that restaurants in which offer a fast casual experience are becoming increasingly successful as this type of dining experience has slowly become more popular amongst consumers [Growth for Fast Casual Restaurants Remains Strong].

The companies that are sharing good news in their financial reporting are Chipotle Mexican Grill inc., Panera Bread Inc., Starbucks Corp., and Darden Restaurants Inc [CMG, DRI, PNRA, SBUX Annual Income 2012]. These restaurants in the quick-service sector have higher growth and revenue rates, while casual, upscale dining restaurants seem to be lagging behind [U.S. Restaurant’s 3rd Quarter..WSJ]. As stated before, I believe quick-service restaurants are experiencing the largest growth and advancement because they are starting to provide healthy and low-priced options for customers who no longer have the income to eat at restaurants that offer the full dining experience. I am very optimistic about this sector of the restaurant industry because it has proven itself to be very fruitful.

 

 

CMG Annual Income Statement - Chipotle Mexican Grill Inc. (2012). Annual Financials. (n.d.).MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved from http://www.marketwatch.com/investing/stock/cmg/financials

DRI Annual Income Statement - Darden Restaurants Inc. Annual Financials. (2012). (n.d.).MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved from http://www.marketwatch.com/investing/stock/DRI/financials

PNRA Annual Income Statement - Panera Bread Co. Cl A Annual Financials. (2012).MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved from http://www.marketwatch.com/investing/stock/PNRA/financials

SBUX Annual Income Statement - Starbucks Corp. Annual Financials. (2012.).MarketWatch - Stock Market Quotes, Business News, Financial News. Retrieved from http://www.marketwatch.com/investing/stock/SBUX/financials

U.S.Restaurants' 3rd-Quarter Same-Store Sales Growth Seen at 2.8% - WSJ.com. (n.d.).Business News & Financial News - The Wall Street Journal - Wsj.com. Retrieved from http://online.wsj.com/article/BT-CO-20120918-710661.html

Stock:Chipotle Mexican Grill (CMG). (2012). See your portfolio in a whole new light - Wikinvest. Retrieved November 6, 2012, from http://www.wikinvest.com/stock/Chipotle_Mexican_Grill_(CMG)

Growth for Fast Casual Restaurants Remains Strong - QSR magazine. (n.d.). Quick-Service and Fast Casual Restaurant News and Information - QSR magazine. Retrieved from http://www.qsrmagazine.com/george-green/fast-casual-still-future?microsite=9344

Panera Bread 3rd-Quarter Net Up 27% on Stronger Same-Store Sales - WSJ.com. (n.d.).Business News & Financial News - The Wall Street Journal - Wsj.com. Retrieved from http://online.wsj.com/article/BT-CO-20121023-714934.html