Emerging brands look to reboot casual dining
Arooga’s Grille House started 10 years ago after the conversion of a failed restaurant in Harrisburg, Pennsylvania. Today it has 19 locations with a 20th slated to open this fall.
Industry observers and analysts began sounding the death knell for casual dining around 2014, as “polished” casual and fast casual concepts moved into the marketplace, capturing diners’ attention and, yes, their dollars.
Many chain restaurants such as Applebee’s, Ruby Tuesday and Outback Steakhouse began closing stores and some went into deep discounting mode, offering deals such as unlimited appetizers for $10 in an attempt to increase traffic. The major players are still grappling with a changing restaurant landscape, one in which consumers want convenience and expect value alongside quality food. But as Dine Brands Global’s Stephen Joyce said during a first quarter earnings call, the segment is far from dead.
“I’d like to put to rest false news about the death of casual family dining and the abandonment by millennials of the categories,” said the CEO of Applebee’s parent company. “Our businesses are growing and approximately half of our guests are under the age of 34; and the last time I looked, those are millennials.”
Applebee’s domestic systemwide comparable same-store sales increased 3.3 percent versus Q1 2017 and the start of 2018 brought the second consecutive quarter of positive sales and traffic for the brand.
Red Robin, meanwhile, is seeing results from its investment in digital technology, as its off-premise sales rose nearly 40 percent in the first quarter, to 9.4 percent of total sales, up from 6.3 percent the previous year. In an earnings call CEO Denny Marie Post said off-premise dining is a key building block as the brand moves from “being only a destination to a complete source of craveable, customizable burgers.”
“We’re going to do this by going where the guests wants us to be, when they want us and how they choose to enjoy Red Robin, be it in the restaurant or out,” said Post.
A new crop of casual-dining franchises is ready to try their hand at giving consumers what they want. Turn the page for their stories.
Cody’s Original Roadhouse
The concept: Recalling the rural roadhouse restaurants of the 1940s, Cody’s is a casual dining concept its CEO said is rooted in offering “the best quality at the most affordable price.” Generous portions come out of Cody’s open kitchens, which prepare items from a wide-ranging menu of steaks, chicken, seafood, burgers, sandwiches, salads and wings. “It’s really a place that we see multiple visits inside of the same week,” said Shane Morrison. “It’s a truly diverse menu,” though nearly 60 percent of sales come from steaks. The system is 100 percent franchised, but Morrison said company restaurants are coming over the next 18 months.
The stats: Morrison Companies became the franchisor of then 13-unit Cody’s in 2014 and has since added three franchise restaurants to its Florida-based footprint. The investment ranges from $772,225 to $1.4 million, with the AUV of a Cody’s at $4 million from a roughly 6,000-square-foot restaurant.
The competition: Local chains and national players such as Texas Roadhouse are competitors for Cody’s, said President Sam Megala, but he sees the presence of other casual dining and steakhouse spots as “an opportunity for us to stand out.” “I don’t view competition as a bad thing, it keeps us pushing.”
The challenge: Megala said he and Morrison are continuing to fine-tune the system, including standardizing operations and training. “It’s a very large menu, which is great for customers, but we’ve had to simplify the process and automate some things so it’s easier on the operator and consistent across stores.”
Arooga’s Grille House & Sports Bar
The concept: Gary Huether Jr. launched the Arooga’s concept after taking over a failing restaurant and bar in Harrisburg, Pennsylvania, 10 years ago. Sports fans get “an amazing viewing experience,” but Arooga’s is positioned to attract all customers wanting a quality meal, he said. Arooga’s is a Certified Green Restaurant in Pennsylvania and all restaurants follow a range of rules, from no use of polystyrene foam, to using environmentally friendly chemicals and soaps, and installing energy management systems to reduce the carbon footprint.
The stats: With 19 locations (10 company-owned) open and a 20th slated for September, Aroogo’s is focused on East Coast development as the brand expands, mainly with multi-unit ‘zees. Arooga’s awards whole counties for development. The estimated initial investment range is $1.3 million to $3.9 million.
The competition: “I look at everyone as competition now,” said Huether Jr. as he named fast-casual restaurants and brewpubs along with other traditional casual dining players. Grocery and convenience stores are also increasing their fresh and prepared food offerings, which is why Huether Jr. stressed the experience of dining at Arooga’s.
The challenge: Finding quality people. “When we’re going into new markets, it’s more challenging to find those top managers,” said Huether Jr. The company offers competitive hiring packages and touts its position as an emerging brand with providing employees “an opportunity to rise and grow with us.”
Lolo’s Chicken & Waffles
The concept: Founders Larry “Lo-Lo” and Rasheedah White debuted their casual dining soul food concept in 2002 in Phoenix, Arizona, after White perfected his fried chicken recipe in the back of his grandmother’s restaurant. Lolo’s has its own waffle mix, maple syrup and hot sauce, and the full menu including shrimp and grits, salmon croquettes and collard greens, is made from scratch. Lolo’s also has a full lineup of “Dranks,” cocktails with names like Georgia On My Mind and Purplesaurus Rex, plus wine and beer.
The stats: Lolo’s launched its franchise effort in 2014 and now has eight locations in Arizona, Nevada and Texas. The brand is signing both single and multi-unit franchise agreements, and the initial investment for one store ranges from $850,000 to $2.3 million. The company noted gross sales at its Phoenix location were more than $4.5 million in 2016.
The competition: Lolo’s is entering a crowded casual, all-day breakfast segment with the likes of Another Broken Egg Café, Broken Yolk Café and legacy brand Denny’s. But its broader soul food menu with entrees such as shrimp mac and cheese, coupled with a full bar, set the concept apart.
The challenge: Ensuring operations are executed consistently. As Lolo’s adds franchise restaurants, it’s working to ensure brand standards and maintain the quality of its menu. Last year White and his wife took over operations of the Lolo’s in Las Vegas after he said the operators weren’t living up to the Lolo’s standard.
Big Whiskey’s American Restaurant & Bar
The concept: “We really put a lot of passion and process behind our food,” explained co-founder Paul Sundy. An expansive menu covers steaks, pastas, appetizers, salads, wraps and burgers, and each location has full bar with more than 100 whiskeys and at least 20 tap beers. About 33 percent of sales come from the happy hour and late night segments, and dinner accounts for nearly 40 percent of sales. The brand is testing packaging options as it evaluates adding delivery to its operations.
The stats: Based in Springfield, Missouri, Big Whiskey’s has seven company restaurants open in the state and two franchise locations in Kansas City and Bentonville, Arkansas, with deals signed in Birmingham, Alabama, and Las Vegas. The investment range is $725,500 to $1.3 million, and 5,500 square feet is the “sweet spot” for restaurant size, said President Austin Herschend.
The competition: “When we go into a market we ask, who’s exactly like us? And we haven’t found that,” said Sundy. Still, primary competitors include Applebee’s, TGI Fridays, Texas Roadhouse and BJ’s Brewhouse.
The challenge: Keeping up with changing menu trends and diner preferences. “The tastes buds and palates of our customers are changing almost daily,” said Sundy, but they still want to keep the originally developed taste profiles. “It’s about not losing what we’ve been known for and still working on what’s trending across the nation.”