The Casual Dining Operators “Survival Guide”

        The Casual Dining Operators “Survival Guide”  

I admit I have a warm place in my heart for casual dining chain restaurants; however, as their sales continue to slip it appears my fellow Americans may not have their hearts in the same place.  We’re not going to berate the “casual dining set” as they appear to need all the support they can garner.  We’ll point out some differences between the chain-operators versus the independent operators through consumer feedback and attempt to offer some suggestions for the chains attempting a “come back” tour.

            It’s our understanding that home delivery is the potential new darling of casual chain operators.  I don’t even need to read a trade journal to know this as I live in Tampa, have an Outback Steakhouse unit around the corner from me and need only to read the restaurants’ marquee to learn of the latest “test” Bloomin’ Brands is rolling out.  This particular unit had previously tested lunch delivery and of course in now in “Beta” for dinner hour home delivery. 

            They are not alone as Cheesecake Factory is teaming up with DoorDash, T.G.I. Friday’s and Maggiano’s with Grubhub while Buffalo Wild Wings and Red Robin are also offering delivery through third party services.  I imagine each operator will determine whether the third-party model versus developing their own delivery platform is best for them.  Some issues the operators may want to consider include; speed-of-service, driver liability and which criteria to measure delivery’s success?

            Prior to suggesting options for casual chains to “turn around the ship” allow us to review which segments are performing well.  We know that quick or limited service restaurants sales are up, this may be due to their ability to shadow the culinary offerings of fast-casual at a lower price point.  Combine this with their speed-of-service and we understand how they command both the breakfast and lunch space.  Another group that is “eating casual dining’s lunch” are the independent casual dining operators.

            We have previously offered that the demographic change America is currently experiencing is a driver of changes in consumers dining habits.  Those “darlings of the marketing set” Millennials are contributing to the urbanization of the country where locally owned and operated casual dining restaurants within city neighborhoods are the beneficiaries.  This proximity offers another convenience of either walking to your favorite dining place or taking a short shared-ride-service trip to or from (or just from if it’s been an evening of heavy drinking).

            Food service consulting firm Pentallect Inc., along with research partner Critical Mix, recently completed a study of the casual dining segment to offer a snapshot of the current landscape for chains versus independents.  The results are in and independents were rated superior on 12 out of 15 criteria, highlights include; being special, community-oriented, personalized service, offering better quality food and service while being perceived as sharing their neighbors’ (consumers) values.  It turns out that delivery was a “push” and chains out-shown others regarding technology, convenient locations and social media outreach.

            To our friends at the casual chains we suggest a deeper dive into the positives of this study.  If consumers are increasingly using home delivery options perhaps applying a combination of those social media skills and technology to capture more of those delivery revenues.  If you have superior locations those should be leveraged to support not only the home “dinner hour” delivery; alternatively, why not create a custom “limited” lunch menu for local area businesses that utilizes bicycle couriers for even faster service? If you’re going to embrace delivery why not test as many different styles as possible, but maybe not the drones?

            One last word on the delivery model, how will casual chain operators compensate for the lost revenue on adult beverages?  Industry operators and observers both know the chains will leave a substantial amount of money on the table if they can’t replace that lost beverage revenue.  So perhaps the real answer to the casual chain segment turnaround is to be more like the independents?