Krispy Kreme Cheeseburger: Today, state fairs. Tomorrow?

http://www.csmonitor.com/Money/new-economy/2010/0817/Krispy-Kreme-Cheeseburger-Today-state-fairs.-Tomorrow

Krispy Kreme Cheeseburger: Today, state fairs. Tomorrow?
Krispy Kreme Cheeseburger sounds atrocious, but many who've tried it become fans. Will a restaurant chain pick it up?
Laurent Belsie / August 17, 2010

The Krispy Kreme cheeseburger – that's right, a cheeseburger between doughnut halves – reportedly got its start when a chef in Decatur, Ga., came up with the idea. The chef, Chandler Goff, named it the Luther Burger.

Then in 2006, an independent baseball team, the Gateway Grizzlies, began selling its own version at their baseball park in Sauget, Ill.

That's when the doughnut/burger combination began to attract all kinds of attention. Sports Illustrated, ESPN, CNN, and others reported on the Grizzlies' burger. Paula Deen, of TV cooking fame, added an egg to the Luther Burger and loved it.

Word began to spread.

Admittedly, the Krispy Kreme Cheeseburger (KKC) sounds atrocious to just about everyone who hasn't tried one. The doughnut is halved, then its cut sides are grilled and become the outside of the sandwich so that the sugary glaze makes mortal contact with the cheese and the meat.

Even if that sounds good, there are all kinds of objections from the eat-healthy crowd.

Nevertheless, the sweet 'n salty combination seems to be attracting a growing number of fans.

The KKC appeared at a Massachusetts fair in 2009 and is a feature at this year's Wisconsin State Fair, which ended Sunday, and Kentucky's state fair, which begins Thursday. [Editor's note: This sentence was changed to reflect the start date of Kentucky's state fair.]

The Machine Shed, a restaurant with a food concession at the Wisconsin State Fair, told the Milwaukee Journal it expected to sell about 3,500 Krispy Kreme cheeseburgers over the first three days of the fair. About a quarter of its customers were pitching in an extra buck for the side order of chocolate-covered bacon.

So it seems only a matter of time before restaurants begin to pick up on the idea.

Chef Goff's restaurant is now shuttered. But earlier this month, the blog A Hamburger Today reviewed a KKC at Rub BBQ in New York City: "The sweetness of the doughnut didn't overpower the deeply charred, moist patty combined with the toppings of sautéed onions, cheese, pickle chips, and chipotle aioli," wrote reviewer Robyn Lee.

According to the blog, Crave Shack in nearby Astoria, N.Y., offers its own version: the Crave Doughnut Burger.

Late last year, some news reports suggested that the Wendy's fast-food chain might be interested in buying Krispy Kreme, which could have made the KKC a quick national phenomenon. But no deal materialized.

Fans of healthful eating can breathe a sigh of relief – for the moment.

Restaurants on the Ropes

http://finance.yahoo.com/news/Restaurants-on-the-usnews-15511482.html

Restaurants on the Ropes
Rick Newman
Friday June 12, 2009

When Americans get stressed out, one thing they do is eat. But apparently not enough.

The dismal economy has punished retailers, with companies like Circuit City and Linens 'n Things going extinct and dozens of others losing money. Now it's hitting their cousins in the restaurant industry, too. The Bennigan's and Steak & Ale chains were early casualties, going belly up last summer. This year, with Americans cutting back on spending, sales at restaurants could fall by 10 percent or more. Analysts don't expect widespread closures, but some chains are likely to close unprofitable outlets, cut back on service, and look for other ways to reduce costs.

As in retail, companies that help people save money will weather the storm better than others. Chains like McDonald's, Pizza Hut, and Olive Garden, which offer ample portions at value prices, should do OK and maybe even pick up market share. It helps if they've been run conservatively, with low borrowing costs and cash held for a rainy day.

Other eateries are in a pickle. Fancy restaurants that had long waits a few years ago are now begging for customers and offering sales. Midpriced casual dining outlets are losing customers to cheaper fast-food joints. Even some dollar-menu franchises are suffering if they're overdependent on mall traffic or clustered in regions where the economy is weakest. A key factor is debt: With sales down everywhere, many companies that borrowed heavily to remodel, expand, or buy other franchises now find that interest payments gobble up a nerve-wracking amount of cash flow.

Since debt is such an important menu item, we scoured data from ratings agency Standard & Poor's to gauge which well-known restaurants are facing tough challenges. The following list represents companies that meet two criteria: They have a credit rating of B or lower, and S&P assigns them a negative outlook. Landing on this list doesn't mean the company is likely to declare bankruptcy or close its doors. But these firms are vulnerable to deteriorating economic and financial conditions. And the negative outlook means there's a chance S&P could downgrade the company's rating over the next six to 24 months. Here's our watch list:

Perkins Restaurant and Bakery. Company accountants could probably use some of the comfort food on the menu at this diner-style franchise, which has about 500 locations, mostly in the Midwest. Like other restaurants, Perkins has been able to cut food costs since they soared in 2007. But revenue has fallen, and the parent firm lost $9.7 million in the first quarter. S&P says the firm's liquidity position is "tenuous." With market share of just 8 percent, Perkins is more vulnerable to a lousy economy that competitors like Denny's (22 percent market share) and IHOP (19 percent). Perkins also owns the Marie Callender's Restaurant and Bakery chain, which suffers from similar financial burdens. Plus, Marie Callender is based in hard-hit California, which has been hammered by the housing bust.

A company spokesperson says Perkins has cut expenses by $7.3 million to help shore up its finances, delayed some remodeling, and called a halt to expansion.

El Torito. Slumping sales and steep debt are an unappetizing combo, especially in California, where this chain is based. The parent firm, Real Mex Restaurants, has bought time by extending a key credit line until next January. But S&P has questioned whether the company, owned by a group of private-equity firms, will have the cash flow to comply with loan terms over the next two years. Real Mex also owns Chevy's, the Acapulco chain, the more upscale El Torito Grill, and several other eateries. All are facing the same woes.

Real Mex says that cost-cutting has helped sustain earnings, and it recently hired a new CEO to help turn things around. The company also announced plans recently to issue new debt that would help cover a major payment due to lenders next year. If that offering is successful, it would indicate investors' confidence in the chain.

Sbarro. Many of this pizza chain's 1,070 outlets are in malls, where traffic is down and spenders are stingy. That contributed to a $5.7 million loss in the first quarter, more than double the red ink from a year ago. Interest payments on debt gobble up much of the company's cash flow, leaving little margin for error. The company is especially vulnerable to any rises in food or commodity costs and to competition that could force prices down. With about 40 percent of sales coming during the Christmas season, the company will need strong December results at a time of high unemployment and weak spending. A Sbarro executive declined to comment on the company's financial prospects.

Captain D's Seafood Kitchen. This chain's thrifty appeal--"sit-down food at fast-food prices"--hits the right note during lean times. And aggressive cost-cutting has helped offset falling sales. But debt is still too high, compared with the company's earnings. Parent company Sagittarius Brands got some relief last year from lenders who agreed to relax certain financial requirements. But the old terms go back into effect in 2010, and S&P doesn't think the firm, which operates nearly 600 restaurants across the south, will be able to meet them. A breach could trigger higher borrowing costs or give lenders the right to call in their loans. The California-based Del Tacos chain, which Sagittarius bought in 2006, is under similar pressure. The company didn't respond to calls seeking comment.

Krispy Kreme. The famed doughnut chain got too chubby over the last 15 years, and it's been closing unprofitable stores to help reverse several years of steep losses. Revenue has plunged since 2005, but cutbacks helped the company turn a $1.9 million profit in the latest quarter. Lenders have provided a breather by easing some of their requirements over the last two years. The temporary reprieve expires in 2011. By then, the company hopes that streamlining, profitable new overseas stores, and other measures will have strengthened its finances.

Spokesman Brian Little points out that Krispy Kreme has cut its debt by nearly 40 percent and has a $21 million cash cushion. The recession, he adds, isn't as daunting to Krispy Kreme as to other food chains: "We sell an affordable indulgence consumers will purchase when they can't afford to treat themselves or their families to other luxuries."

Mastro's. These elegant steakhouses may be among the nation's best, but they're also clustered in Arizona and southern California, where housing woes have char-broiled the economy. With just 7 outlets (including two Ocean Club restaurants), Mastro's lacks the scale and geographic diversity of bigger chains like Morton's and McCormick & Schmick's. Sales have fallen along with customers' net worth and corporate expense budgets, and Mastro's cash flow is likely to get worse before the double-cut porterhouse ($68.50) comes back into style.

To cope, Mastro's is scaling back expansion plans, and may only open four new restaurants by 2012, fewer than half its original target. "Returns to investors will be impaired," says CEO Tom Heymann, "but doing this will improve our cash flow and still allow us to grow and meet our commitments to the banks." And refrain from adding burgers and hot dogs to the menu.

Companies on S&P Watch List

http://money.aol.com/creditdebt/article/usa-today/_a/credit-crunch-puts-some-companies-on/20080324160309990001

Credit Crunch Puts Some Companies on S&P Watch List
By MATT KRANTZ, USA Today
2008-03-24

Homeowners aren't alone in struggling to keep up with their interest payments. As Bear Stearns' near-brush with bankruptcy shows, some companies also are dodging the repo man. Already this year, 24 public companies with assets worth $9.9 billion have filed for bankruptcy protection, BankruptcyData.com says. That's two-thirds higher than the defaults during the same periods in 2007 and 2006.

Things will likely get much worse. Bond watchers are braced for many more blowups as companies struggle with their debt loads and consumers cut back on their spending. Debt-rating agency Standard & Poor's expects at least 4.6% of speculative-graded companies to default by the end of the year, up from the 25-year low of 1.1% in January and above the historical 4.4% average, says Diane Vazza, managing director at S&P.

If S&P is right, that could mean as many as 74 additional defaulting companies within the next 12 months.

While nobody knows exactly which companies will default and which will turn themselves around, S&P's latest list of its "weakest links" shows companies that have the lowest credit ratings and face a strong possibility of additional downgrades.

Worldwide, there are 114 companies on the weakest-link list, the highest number in 16 months. And there are now 93 U.S. companies on the list, including some household names, such as Eddie Bauer, Sbarro, Guitar Center, Blockbuster, Six Flags and Linens 'n Things. The number of U.S. weakest-link companies jumped 13% from February through March, showing just how much strain some companies are under.

"We're on the first leg in the up-cycle of defaults," Vazza says. "The second half and in 2009, we're going to see a lot more deterioration. This is just the beginning."

There are some clear-cut trends among companies that are struggling the most, including those that:

Rely on consumer discretionary spending

Companies that depend on consumers spending money for non-essential items are most at risk as the economy slows, S&P says. Industries with the most "weak links" include entertainment, consumer products and restaurants.

One industry that really stands out is retailing. Consider Linens 'n Things, which sells home products. It is not publicly held and declined to comment for this story. But industry leader Bed Bath & Beyond cut its forecast for its fiscal fourth quarter ended in February. Bed Bath & Beyond has no long-term debt, unlike Linens 'n Things, which has $650 million, S&P says.

Another well-known retailer, Eddie Bauer, is on S&P's list. Last year, the seller of outdoor apparel lost $102 million on top of a $212 million loss in 2006. Eddie Bauer also carries heavy debt — more than $260 million, exceeding the $256 million of equity in the company, says S&P's Capital IQ.

Eddie Bauer is part of a trend that saw retailers boost debt by 31% the past year, says research from Marti Kopacz of Grant Thornton. Eddie Bauer did not return calls for comment. High debt is a heavy load for firms when shoppers are in a sluggish economy.

"You can buy fewer pillows and not eat out as many times," Vazza says.

But Robert Friedman, CEO of retailer Loehmann's, says being in a challenging business and having heavy debt shouldn't land his company on S&P's list. It's "uncalled for," he says. "We are not delinquent with any payments."

Carry heavy debt loads

Borrowing might have seemed like a sound idea when financing was cheap and easy to get, but companies that loaded up on debt now know it can bite hard when the economy slows and credit dries up.

When debt comes due, shakier companies that can't afford to pay it off may have trouble replacing it with new debt now that lenders have tightened up, says Jing Zhang, head of research at Moody's KMV. About $6.8 trillion in corporate loans and bonds come due this year, he says.

Just making payments on existing loans can be more onerous as business slows down.

Six Flags, the operator of amusement parks across the country, is attempting to turn around its business while carrying debt of $2.7 billion. "The debt is a problem," says David Miller, analyst at SMH Capital.

The suggestion Six Flags may be a candidate for bankruptcy any time soon is "silly," he says. The company has had a string of "biblically bad luck," including bad weather in many of its markets last year. While the company's debt load is large, it doesn't come due until 2010, Miller says.

Analysts expect the company's earnings to double in the third quarter, says Reuters Estimates. The company didn't return calls.

Heavy debt is also an issue at Blockbuster. The video rental chain's former parent company loaded it up with more than $1 billion in debt, says Michael Pachter, analyst at Wedbush Morgan.

But he thinks bankruptcy isn't a risk. The company's debt is down to $758 million, with just $44.7 million due this year and $56.5 million due next year, he says. Blockbuster is expected to generate at least $100 million in cash flow, more than enough to service the debt, so "The risk of default is nil in 2008 or 2009," he says.

Blockbuster also doesn't see imminent danger. "We expect to generate meaningful cash flow to return Blockbuster to profitability and be in full compliance with debt covenants," says spokesman Randy Hargrove.

Some blame private-equity firms for loading too much debt on companies they bought.

IAP Worldwide, a defense contractor owned by private-equity firm Cerberus, has $535 million in debt and is on S&P's list. But in an e-mailed response, Cerberus said IAP has been able to restructure its debt.

Face operational issues

Krispy Kreme is an example of companies on S&P's list that have had persistent problems in managing themselves profitably. Ever since the doughnut chain's accounting scandal in 2004 and 2005, it has been trying to turn itself around.

Aftereffects of the accounting mess coupled with too many new stores have put the company in a tight spot. It has lost money for 13-consecutive quarters, and Thomson Financial says analysts expect the company to lose money again when it reports fiscal fourth-quarter results April 7. Its stock has fallen more than 90% the past five years. Krispy Kreme has had a revolving door of executives and in January named a new CEO. A few months earlier, it said it would realign operations. Krispy Kreme declined to comment for this story.

But while some companies and industries face serious challenges both internally and externally, Moody's Zhang doesn't expect a serious default epidemic. "Default risk has been increasing," he says. "But the relative level is very low."

The FatKreme: Does It Predate the Luther Burger?

"M-hmmmmm. This is a tasty burger!"
Samuel L. Jackson as Jules Winnfield in Quentin Tarantino's Pulp Fiction

http://food.yahoo.com/blog/ahamburgertoday/2775/the-fatkreme-does-it-predate-the-luther-burger

The FatKreme: Does It Predate the Luther Burger?
Posted Fri, Mar 02, 2007

In a stunning turn of events that may shake the very foundations of burgerological anthropology, A Hamburger Today has been presented with credible new evidence that the first burger to use a Krispy Kreme doughnut as a bun may have evolved almost two years earlier than previously thought.

An AHT reader contacted me about the Gateway Grizzlie Burger, the Krispy Kreme-bunned bacon cheeseburger served at the stadium of independent league baseball team the Gateway Grizzlies: "Just thought I'd throw out there that it seems the original idea for the Krispy Kreme burger can be found here and is referred to as the Fat Kreme back in 2003. Either way, that's a heart attack on a bun/doughnut!"

The Grizzlie Burger, which appeared in spring 2006, was itself a take-off of the Luther Burger, an invention of Decatur, Georgia, pub Mulligan's that dates to early 2005.

Dubbed the Fat Kreme, this early version of fusion-burger excess places the contents of a Fatburger burger onto the aforementioned sugar-glazed treat on April 6, 2003. What's more, this new evidence moves the locus of the mashup from the South to Seattle, a geographic region known more for its advances in coffee culture than for its contributions to calorie-rich deep-fried dining.

Unconfirmed reports within the blog post in question hint at an even earlier version of the KK-burger mashup, but using In-N-Out burgers instead.

Burger anthropologists in AHT's research department were puzzled as to why, like the Neanderthals, the Fat Kreme was suddenly eclipsed by a similar species. But at least one leading researcher who requested anonymity said he believed it had to do with the fact that Yukino, the blogger who invented the Fat Kreme, placed the doughnut bun facing glazed side out. The more advanced Grizzlie Burger, in contrast, has an evolutionary advantage in the fact that its toasted-doughnut bun faces glazed side inward, giving its eater a nonsticky fingerhold.

Dunkin' Donuts going free of trans fat

http://www.ocregister.com/news/dunkin-trans-fat-1822528-doughnut-chain

Sunday, August 26, 2007
Dunkin' Donuts going free of trans fat
The change is to take place at 5,400 U.S. restaurants by Oct. 15.
By MARK JEWELL
The Associated Press

BOSTON Dunkin' Donuts, the food-on-the-go chain whose name celebrates a treat that's symbolic of unhealthy eating, is trying to refresh its image by largely eliminating trans fat across its menu, Homer Simpson be damned.

Dunkin' planned to announce Monday that it has developed an alternative cooking oil and reformulated more than 50 menu items – doughnuts included. The Canton, Mass.-based chain says its menu will be "zero grams trans fat" by Oct. 15 across its 5,400 U.S. restaurants in 34 states.

About 400 locations nationwide that took part in a four-month test already have made the switch to a new blend of palm, soybean and cottonseed oils. That includes all restaurants in New York City and Philadelphia, which are forcing restaurants to phase out their use of artery-clogging trans fat.

The ice cream chain Baskin-Robbins, another unit of Dunkin' Brands Inc., plans to be zero grams trans fat by Jan. 1.

Dunkin' isn't claiming it will become "trans fat free," but does say any trans fat in foods including doughnuts, croissants, muffins and cookies will fall below half a gram per serving. Federal regulations allow food labels to say they've got zero grams of trans fat, provided levels fall below the half-gram threshold.

A nutrition advocacy group welcomed Dunkin's addition to the list of restaurant chains that have recently shifted away from trans fat.

"It's good news that they're dropping most, if not quite all, trans fat," said Jeff Cronin, spokesman for the Center for Science in the Public Interest, a Washington-based nonprofit. "If Dunkin' Donuts can do that, anyone can."

But Cronin cautioned that when it comes to Dunkin's doughnuts, "we're still talking about a food that's mostly white flour, sugar, and fat."

Dunkin' isn't positioning its namesake product as health food – a shift that would involve more disbelief suspension than might be possible for a treat synonymous with portly, doughnut-gobbling Homer from television's "The Simpsons."

"The goal was not to make a healthy doughnut, it was really to create a doughnut that was better," said Joe Scafido, Dunkin's chief creative and innovation officer. "Certainly, we did not create a healthy doughnut."

Although its coffees are by far a bigger seller, the New England-bred, 57-year-old chain was founded on the reputation of its doughnuts. Now, Dunkin' claims to be the first major chain to introduce a zero grams trans fat doughnut, although smaller doughnut makers have already done so. Mainstream doughnut makers' products can have around 5 grams of trans fat apiece.

The main source of trans fats is partially hydrogenated oils, formed when hydrogen is added to liquid vegetable oils to harden them. Evidence suggests that artificial trans fats boost "bad" cholesterol and lower "good" cholesterol, increasing the risk of heart disease and stroke.

Dunkin' is ahead of Krispy Kreme Doughnuts Inc., which has yet to roll out a zero gram trans fat doughnut but hopes to do so. Brian Little, a spokesman for the North Carolina-based chain, said, "We continue to work aggressively with outside supply partners, and our goal is to get to zero trans fatty acids while maintaining great Krispy Kreme taste."

A call seeking comment from another chain, California-based Winchell's Donut House, wasn't immediately returned.

Starbucks Corp., Dunkin's Seattle-based rival in the coffee shop niche, said in May that it would cut artificial trans fats out of its food and drink by year's end in stores in the continental U.S., Alaska and Canada.

Dunkin's announcement follows about four years of research of more than 28 alternative cooking oils and proprietary blends.

This past spring, hundreds of restaurants began taking part in a test to gauge customer reaction to the blend that Dunkin' ultimately selected. Managers at participating stores were split into two groups, with one receiving conventional cooking oil, the other receiving the experimental oil, and neither group knowing which type they received. Dunkin' closely watched sales and customer response at restaurants with the experimental oil.

"We got no negative consumer feedback, and we sold 50 million doughnuts in that time," Scafido said.

Dunkin's 1,900 locations outside the U.S. are expected to begin using the new oil over the next couple years, he said.