Casual dining’s demise exaggerated
A lot of people think casual dining will soon disappear, that it’s a hot potato being tossed from one private equity group to the next before time runs out. Despite the segment’s issues, there is plenty of innovation among the best brands.
One just has to look at the sales numbers: 12 of the 16 top companies were able to grow sales at a greater pace than units. Certainly, many brands raised prices, but you don’t get sales growth like the 10.9 percent lift at Buffalo Wild Wings, or the 9.6 percent bump at Steak ‘n Shake, or the 10.4 percent increase at Ruth’s Chris with just price.
No, those companies and others truly innovated their offerings and experience in the face of some tough headwinds and oversupply that kept the segment largely flat.
At Buffalo Wild Wings, the growth leader in the segment, 2015 meant a host of experiments, new limited time offer sauces and the fruition of a new prototype dubbed Stadia that kept things fresh and extended efficiency.
“When it’s a new build it’s hard to tell, but certainly on remodels we’d see a lift of 5 percent or more,” said CEO Sally Smith. With an average unit volume of $3.3 million in 2015, that’s a healthy bump.
Expanding on the sports offering was also a driver; the brand made a systemwide deal with DirectTV to get every sporting package in every restaurant, standardizing the experience for travelers and other faraway fans.
The better burger wars showed that beef and ice cream aren’t going anywhere. Both Steak ‘n Shake and Johnny Rockets found good growth, despite an explosion of fast-casual better-burger concepts.
Johnny Rocket’s president of operations and development James Walker said a new package of decor, upscale plate wear and other consumer-driven changes has delivered a massive, 30 percent comp increase at remodeled locations.
And a high-efficiency kitchen has empowered the brand to give something other better-burger concepts have largely ignored: a better-burger drive-thru order in three minutes.
“If we can deliver that high-quality experience with high-quality food in a time frame to do what other people do in their lives, that can be a key differentiator,” said CMO Joel Bulger.