Subway

On August 2, Treasury Secretary Timothy Geithner wrote an op-ed in the New York Times with the title, “Welcome to the Recovery.” Despite the brash headline, Geithner was cautiously optimistic about the direction of the economy.

“Recoveries that follow financial crises are typically a hard climb,” he wrote. “That is reality. The process of repair means economic growth will come slower than we would like. But despite these challenges, there is good news to report.”

The good news, the secretary said, includes “booming” exports, private job growth (“not as fast as we would like”), a stabilized banking system, and a business sector that has “repaired its balance sheets” and is in “a strong financial position to reinvest and grow.”

Geithner conceded that such positive indicators were “cold comfort to those Americans still looking for work and to those industries, like construction, hit hardest by the crisis.” But he defended the Obama administration’s actions to combat the recession: the $787 billion stimulus package; the Trouble Asset Relief Program, or “bank bailout,” which was set in motion by the Bush administration; and the so-called “auto bailout” of Chrysler, General Motors, and Ford.

Though there is still a tough row to hoe, Geithner said, “we are coming back.”

Some restaurant industry players, however, are far less optimistic than the Treasury Secretary.Read more

When the economy is tough, restaurants tend to get tough in their advertising. As customers tighten their wallets, chains will often claim superiority over competitors in the hopes of boosting business. Comparative advertising, as it’s called, veils an often messy marketing strategy.

Take Domino’s recent campaign-touting victory in a nationwide blind taste test that pitted the Ann Arbor, Michigan–based chain against Pizza Hut and Papa John’s. In the study, conducted by Lieberman Research Worldwide, a majority of participants preferred Domino’s pepperoni, sausage, and extra cheese pizzas to its main competitors’ offerings.

Domino’s insisted the results accurately reflected consumer taste preferences, but both Pizza Hut and Papa John’s immediately called them into question.

The corporate dust-up mirrors a similar situation early last year when Subway and Domino’s duked it out over their oven-baked sandwiches, a battle that featured a commercial of Domino’s CEO David Brandon putting a cease-and-desist letter from Subway in the oven (where else?).

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One year since the economic collapse brought restaurant growth to a standstill, some quick serves have started to see signs of recovery.

The burst of the housing bubble last September, which sent the world economy crashing, made expansion nearly impossible. Businesses stopped investing and banks stopped lending. The fallout at Sandella’s Flatbread Café was typical.

“The pipeline didn’t just stop getting filled,” says CEO Mike Stimola. “The whole thing basically flew apart.”

Sandella’s, which is based in West Redding, Connecticut, and has more than 100 locations, averaged 50 franchise applications in each of the first three quarters of 2008. In the next two quarters, the company received close to zero.

“Things just fell off the table,” Stimola says.

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