Le Krispy Kreme (12/15 Newsletter)

Happy Friday!

Lee’s Famous Recipe Chicken in Ohio has tapped former Ohio State legend — and local radio personality — Keith Byars as the “voice” of its AI drive-thru system. Technology provider Hi Auto cloned Byars’ voice, which will now be the one that customers hear when they place an order for Spicy Jumbo Dippers.

This begs the question: if money were no object, whose voice would you clone for your drive-thru system?

Morgan Freeman would lend some gravitas to a Chalupa order. Scarlett Johansson already has some experience playing an AI agent. And then there’s Christopher Walken — sure, his cadence and delivery would ruin your drive-thru times, but maybe it’d be worth it?

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3 NUMBERS

5,500

Net new stores that Domino’s says it plans to open in the next five years. The chain unveiled its goal at an investor presentation held last week, while also announcing a slew of new initiatives, including a new website, app, employee-facing operating system, and even new ovens, which the company says are both cheaper and faster-cooking. (Quite the combo!) But despite certain other chains reviving strange 1980s mascots, the company did not announce any plans to bring back The Noid.

$1.5 million

Funding raised by sustainable chicken restaurant Mt. Joy (coincidentally, also the name of a decent indie band). The concept — which opened its first brick-and-mortar store earlier this month — plans to differentiate itself by serving chicken raised using regenerative agriculture practices. The funding will go toward opening four more locations.

20

Years Randy Garutti will have run Shake Shack when he retires in 2024. Garutti announced this week that he plans on stepping down from the CEO position, but that he’ll remain with the company until a successor is found. Garutti helped grow the chain from a single kiosk in Madison Square Park into more than 500 locations in 18 countries. Shake Shack is expected to top a billion dollars in sales for the first time ever this year.

QSR’s hottest growth market is… France

In his 2012 memoir Paris, I Love You but You’re Bringing Me Down, American expat Rosecrans Baldwin detailed his fellow advertising employees’ love for — and long, luxurious, multi-course meals at — a McDonald’s location next to the Arc de Triomphe:

“There were plenty of fast-food outlets [in the area], but McDonald’s was considered by my coworkers to be classier, more delicious. ‘It’s for families,’ a guy named François told me. He said, surprised, ‘You don’t go to McDonald’s in the States?’

“The McDonald’s was thoroughly French: spacious, handsome, clean. It featured a McCafe up front, which sold McDonald’s espresso and McDonald’s croissants and McDonald’s macarons, and in the back were the registers that sold burgers, fries, and also beer… Most people stuck to what I found a very French way of enjoying McDonald’s: in multiple courses. Chicken nuggets first, then fries and a burger (a Royale Deluxe, or a Big Tasty), frequently two burgers for the men, followed by a salad, and finished with a chocolate muffin or a shake or a hot-fudge sundae. No matter if the ice cream melted by the time they’d finished courses one through three over a span of forty-five minutes.

“According to the New York Times, an average visitor to McDonald’s in France spent fifteen dollars, versus four in the United States [in 2012].”

Baldwin did not work with a group of uniquely fast-food-obsessed Frenchmen. France is absolutely in love with American fast food. From the New York Times last week:

“The sight of French people flocking to American fare might have seemed surreal a generation ago in a country that loves its Michelin-starred restaurants, three-hour dinners and iconic baguette. But today, the world’s gastronomic capital happens to be one of the biggest markets in Europe for major American fast-food chains, as evolving consumer habits, influenced by a more casual younger generation and social media, reshape the dining landscape.”

The occasion for the Times’ story: Krispy Kreme’s arrival in France. At the first store’s grand opening last week, a line of 500 people snaked around central Paris for a chance to snag a dozen glazed donuts. Many of the customers had camped out overnight.

The opening mirrored the scene at the first Parisian Popeyes, which opened to huge crowds this spring. Popeyes has announced that it plans to open 350 restaurants across the country.

Krispy Kreme and Popeyes are just two of many American brands which have recently set up shop in France, including Chipotle (which opened its first location in 2012), Steak ‘n Shake (2014), Five Guys (2016), and Carl’s Jr (2018). They join incumbent chains like McDonald’s (1979), KFC (1991), Starbucks (2004), and Burger King, which closed all its French restaurants in 1997 and made a dramatic return in 2012.

McDonald’s and Burger King are, in a word, crushing it in France. McDonalds’ 1,500 stores generated $6.5 billion in sales last year. Burger King brought in around $1.3 billion. For both chains, the country is their second-largest market.

France is now being called — with a straight face — the “El Dorado for American fast food brands," partly thanks to two fascinating trends coalescing at the same time:

The first: perhaps for the first time since the days of Benjamin Franklin, American culture is cool among the young French.

Netflix — which has made it far easier for non-Americans to consume American-made (and based) content — gets partial credit. Said Alexandre Maizoue, director general of Krispy Kreme France, “[Generation Netflix] have seen all the American series. They like U.S. culture and the American art de vivre.”

American influencers, who livestream themselves digging into a donut or chicken sandwich, are also building incredible amounts of latent hype for American products, resulting in previously-unthinkable scenes on Krispy Kreme and Popeyes opening days.

The second trend: American restaurant chains are committed to some highly ambitious growth plans, and once a brand gains a toehold in a new market, all the incentives are aligned for the company (and, in many cases, its international franchisees) to grow quickly and aggressively. This is especially true for brands that don’t have a ton of white space anymore to grow in the U.S.

Burger King provides an excellent case study. Since BK returned to France in 2012, the company has seen a net decrease of 600 stores in the U.S., while France has gone from zero locations to roughly 500. The recent, rapid growth has created a positive flywheel effect — the stores are new and fresh, burnishing BK’s brand perception and increasing demand in the country for more locations.

Other internationally known brands could grow at similar rates. The hardest (and most expensive) part of entering a new market is attaining brand awareness. But if Instagram has already done much of that work for a company — and it’s done it for years prior to the brand opening its first store in a country — then the economics of franchising an American brand start to look really attractive.

So what will be the next major craze to hit France? A guess: Chick-fil-A hasn’t given too many details on their recent billion-dollar commitment to growing internationally. But one has to believe that, sooner rather than later, we’ll be blessed with an image of a giant anthropomorphic cow promenading on the Champs-Élysées.

Quick Hits

• Retail data released this week shows that restaurant customers remain remarkably resilient — restaurant sales increased 1.6% in November (along with an 11.3% increase year-over-year). Prices increased 0.4% for the month, which means, as Restaurant Business reports, customers “ate out more frequently, made larger orders, restaurants opened new locations or some combination of the three.” Restaurant sales were also helped last month by falling gas prices and a decrease in spend at bigger-ticket retail outlets like electronics and home-improvement stores.
• The latest chapter in the long, strange Boston Market saga: owner Jay Pandya has filed for personal bankruptcy. Pandya listed between $10 and $50 million in assets and liabilities, including $10 million owed to US Foods (which cut off its distribution agreement with the chain earlier this year). It’s unclear how the filing will impact Boston Market’s restaurants, which now number roughly 300 in the U.S.
• Taco Bell is getting deeper into the beverage game, albeit on a limited basis (for now?). Starting today, two California locations will begin serving two new frozen drinks — Coffee Chillers and Churro Chillers — which come in seven different flavors. In a true test of the capabilities of the drive-thru order-taker, a customer will be able to order a Coffee Chiller with Caramel Churro flavor or a Churro Chiller with Dulce de Leche Coffee flavor.
• Like most people currently teeing up a “let’s discuss after the holidays?” email, Starbucks told the union representing its baristas that it wishes to resume contract talks in January, opening up the possibility of the two parties breaking their now two-year stalemate. Starbucks Workers Union represents 360 of the chain’s 9,000 domestic company-owned stores.
• Pizza Hut has sold out of doormats which feature a QR code that can be scanned by delivery drivers, giving them access to a gift code redeemable for a free Pizza Hut pizza. Any delivery driver (from any company) can use the QR code, making this a potentially genius driver recruitment campaign.

Name That Chain!

You get three guesses to name this week’s mystery chain:

• This chain can lay claim to being the official sandwich shop of the New York Yankees.
• Its name was inspired by its founder’s high-school nickname.
• Despite its East Coast origins, California actually has more of the chain’s locations than any other state.

Stay tuned… the answer will be in next week’s email.

Last issue’s answer: Church’s Texas Chicken

#Content Recs

• Do you stack your plates after finishing your meal? Servers appreciate that. Or maybe they hate it! TikTok users debate the subject, ferociously.
• “Were we prepared for this?” A report from the ground on CosMc’s opening day, featuring a two-hour-long drive-thru line, teens trying to pay people to cut said line, and one person’s $104 order.
• How often do you think about the Roman Empire? How about the Grimace Shake? According to Google, these were the first- and sixth-most trending topics, respectively, this year. (For me, it’s twice a week and daily, fwiw.)
• “If you manage to eat it and stay alive you’ve earned great honor in Finland.” Competitive eater Beard Meets Food goes to Finland and eats many things, while filming a fascinating travelogue in the process.
• The beauty and perils of having a restaurant that’s shaped like a hot dog.

International Corner!

In an attempt to spur the imaginations of fast-food R&D departments across America, each week I’ll highlight an international item that should warrant menu consideration in the States.

This week: IKEA’S GIANT TURKEY-SIZED MEATBALL

This holiday season, Ikea’s U.K. patrons can gather 25 of their closest friends and family members to partake in a new tradition: the carving of a roughly 6-to-10-lb meatball. This is not a joke.

From the Washington Post:

"The British branch of the Swedish retailer famous for its flat-packed furniture — and normal-size Swedish meatballs, which are sold in the stores’ cafeterias or in frozen form — is holding a contest in which it is giving away 30 of the giant orbs, along with another 30 ‘vegan friendly Veggieball Christmas Trees,’ which appear to be a cone-shaped pile of smaller, presumably meatless ‘meatballs.’

“To win, participants were instructed to like the company’s posts on various social media platforms, comment on them and tag friends they planned to share it with.”

In an age when AI can easily be used to distort an image, photos of real, comically oversized meatballs must be treasured. I really can’t emphasize enough that you should see the size of this thing.