Casual dining chains hunger for change

That may be an understatement. Just three of 30 restaurant companies that offer guidance on same-store sales trends see improvement before 2009, says a report from securities analyst Jeffrey Farmer at Jefferies & Co.

The Bennigan's and Steak and Ale chains made Chapter 7 bankruptcy filings this summer, shuttering hundreds of stores. Pizzeria Uno is in financial hot water. Lone Star Steakhouse closed 26 stores earlier this year.

Darden, thought to be above the fray, has felt the pain. The owner of Olive Garden, dri Red Lobster and four other chains says same-store July sales at Red Lobster were down 3.7%.

Last year, Darden closed 56 Smokey Bones units and sold off the rest. Applebee's closed 24 underperforming restaurants last year, and parent DineEquity has struggled to sell company-owned units to franchisees to pay down debt.

"In a crowded marketplace, we are working very hard to stand out from the crowd," says Julia Stewart, DineEquity's CEO.

What do these chains need to do to survive and thrive? Here's what top casual dining executives, consultants and consumers told USA TODAY:

•Stand out. Casual dining's long-term problem is one that vexes all companies as they age: how to stay fresh, while offering a unique draw to which no one else in the category can lay claim. Such as Cheesecake Factory's cake giant portions. Outback's high-quality steaks. Olive Garden's Tuscan-like ambience. And Seasons 52's bite-size desserts.

"Each concept must stand for something unique to survive," says Christopher Muller, an industry consultant.

Chili's turned its familiar chili pepper into a towering icon outside its stores to symbolize that things also have changed inside. "It's all about getting out of the sea of sameness," says Brooks.

•Lower prices. More than anything, high prices are what rile USA TODAY readers.

"The prices used to be reasonable, so you could go out more often," says Marcia Lafferman of Paradise, Calif. Now, she says, casual dining prices have crept so high, she's stopped going.

To save money, Brace Cain, an events planner from Atlanta, stopped going to casual dining spots for dinner but goes at lunch, when prices are lower.

While most casual dining chains continue to raise menu prices 1% to 3% every six months — with commodity and labor costs rising — many have been trying splashy specials. Some of the biggest chains are touting $9.99 dinner deals and $5.99 lunch specials.

Seeking more than a temporary — and profit-zapping — boost from discounts, others are trying new tactics. T.G.I. Friday's "Right Portion, Right Price" dinner menu offers smaller entrees starting at $6.99.

One day this summer, Cheesecake Factory rolled back cheesecake prices to $1.50. It resulted in huge lines, says marketing chief Mark Mears. Now, the chain is rolling out a customer loyalty card with incentives to return.

Small freebies — even a free cup of coffee — are a restaurant's lowest-cost marketing with the highest returns, says Dennis Lombardi, executive vice president at consultant WD Partners.

•Fix the food. Casual dining's takeoff 20 years ago was driven a lot by the fact that the food quality far exceeded fast-food offerings — but the prices did not.

That changed drastically in recent years, says Jeff Davis, president of Sandelman & Associates. Fast food's quality has gone way up, but the prices have risen relatively slowly.

Page
  • 1
  • |
  • 2
  • |
  • 3
Join the Discussion
blog comments powered by Disqus
 
You Might Also Like...
See It, Share It
PHOTO: Gisele Bundchen walks the runway during Sao Paulo Fashion Week Winter 2015 on Nov. 4, 2014 in Sao Paulo.
Studio Fernanda Calfat/Getty Images
PHOTO: Seattle Seahawks fans cheer before Super Bowl XLIX against the New England Patriots on Feb. 1, 2015 in Glendale, Ariz.
Timothy A. Clary/AFP/Getty Images
PHOTO: Gisele Bundchen and Tom Brady attend the Costume Institute Gala at the Metropolitan Museum of Art on May 5, 2014 in New York City.
Andrew H. Walker/Getty Images
PHOTO: From left, Tom Brady in Foxborough, Mass., Jan. 18, 2015 and Russell Wilson in Seattle, Wash., Jan. 18, 2015.
Matt Slocum/AP Photo | Ted S. Warren/AP Photo