Old Chicago strive to buck casual restaurant trend
In a crowded category marred with talk of a potential restaurant recession, Craftworks Restaurants and Breweries made a bold statement with one of its many casual restaurant chains. The Chattanooga-based operator announced in September that Old Chicago Pizza and Taproom would sign franchise development agreements to open nearly two dozen restaurants in eight states over the next several years.
With 28 consecutive months of positive comp sales, and $254 million in systemwide revenue, the expansion seems grounded in reality for Craftworks and its flagship company.
While it works to turn Old Chicago into a major casual dining brand, Craftworks is attempting to boost two of its brands, Gordon Biersch and Rock Bottom Brewery, the latter of which may franchise in the future. All three restaurants have continued to bet big on an all-American, recession-proof core: the discovery of local craft beer.
Old Chicago focuses on craft beer and working with outside breweries. Meanwhile, the two up-and-coming centers of Craftworks brewing actually brew their own beer.
Gordon Biersch and Rock Bottom are a bit pricier than Old Chicago as well. While the average ticket for an Old Chicago meal is around $12.50, Gordon Biersch and Rock Bottom tickets are around $17 to $19.
Craftworks CEO Srini Kumar plans on emphasizing growth for Rock Bottom, while contemplating a new concept for Gordon Biersch, which is expanding in airports.
Even in the midst of its recent growth spurt, it’s tough for Old Chicago and the other Craftworks brands not to feel a little bit cramped. Kumar feels the industry is getting compressed, and further squeezed by the QSR category. Kumar simply wants to focus on driving traffic from other big players in casual dining to Old Chicago in particular.
“Casual dining is about winning market share, not growing market share,” he said.
The market share takeover involved improving menu items that their competition does best. While Old Chicago generally focuses on pizza, the restaurant tripled its wing offerings to more than 10.
The brand also noticed customers visiting solely to hang out and drink beer, leading to minimal food purchases and smaller checks. Kumar and his team responded by bolstering the appetizer section and added a cheaper small-plate concept called Tavern Bites, offering various appetizers in a $3 to $5 price range.
A self-proclaimed legacy brand, Old Chicago knows success always goes back to its history, which heavily involves craft beer. The company has multiple promotions throughout the seasons for craft beers, and has focused on its World Beer Tour. “Were always doing something with beers,” Montana and Wyoming franchisee John Johnson said.
Once a dedicated beer consumer reaches the 110-beer milestone, their name then gets into the “Hall of Foam” and the newly crowned consumers get prizes at varying levels including coolers and sports jerseys.
The beer, alongside a plethora of changes to Old Chicago, has kept the restaurant growing under a tough and increasingly competitive fast-casual market.
When Kumar took over the role of Craftworks CEO in 2014 he saw the struggles at Old Chicago and knew the brand needed to emphasize its identity as a legacy brand.
These menu changes were an important aspect in getting the brand back on track.
“When I looked at all the concepts, I saw that Old Chicago is the simplest concept out of my 10 brands. That’s when I started allocating capital, bringing in good teams, and started doing a lot more work on Old Chicago,” Kumar said.
Part of the market share takeover involves franchisees expanding in areas with smaller populations and less competition. John Johnson has two stores each in Wyoming and Montana. His stores are in towns and cities with a generally small population. Johnson says his locations aren’t as saturated as they are in larger markets, and he hasn’t had a problem with declining traffic.
A new prototype
Though things look promising for Craftworks’ casual restaurants, there are plenty of issues that arise for Old Chicago’s expansion efforts. Kumar stresses one key problem for Old Chicago is rising real estate costs, and it’s hard for Old Chicago to find affordable spaces. Then there are certain states, like California, where labor costs are extremely high, making expansion in these states trickier.
In response to the challenging real estate market and trend toward smaller concepts, a new design/prototype with smaller overall square footage has been emphasized. Old Chicago mandated a “refresh initiative” for all of its corporate-owned stores, and encouraged most of its franchisees to follow suit. The executive team has given franchisees the option to pick between a light, medium or heavy renovation. Johnson chose to do a heavy remodeling for his locations in Billings and Bozeman.
“We changed out everything. We changed out flooring, all the seating. We bricked walls, we changed all the exterior signage, all the awnings, with new paint colors, in and out,” Johnson said. “It has yielded really, really well for us.”