Restaurant Development & Design

JAN-FEB 2019

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J A N U A R Y / F E B R U A R Y 2 0 1 9 • r e s t a u r a n t d e v e l o p m e n t + d e s i g n • 3 3 R each in to a grab bag of casual-dining brands these days and what you pull out might just surprise you. Yes, many in the segment continue to struggle and suffer consequences of over-supply, under-differen- tiation and chronic inertia. And all share the pain of higher costs — labor, real estate and food — compared to their fast-casual and QSR competitors. But the odds of pulling a shiny apple out from among the lumps of coal are beginning to improve. You might just grab BJ's Restaurants Inc., for example, a 200-plus-unit beer-centric casual-dining company that oper- ates BJ's concepts in 27 states. The company's comparable- store sales rose 6.9 percent in the third quarter of 2018 over the same 2017 period, marking the biggest comp-store sales growth for the brand in 29 quarters. For the first nine months of 2018, BJ's comp-store sales were up 5.5 percent over 2017, a year in which that same measure took a -0.7 percent hit. In 2016, BJ's saw comparable-unit sales drop -1.3 percent over the prior year. Maybe you'd grab Texas Roadhouse, which operates more than 500 casual, steak- centric restaurants under that brand. In the third quarter of 2018, Texas Roadhouse saw comparable-restaurant sales rise by 5.5 percent at company restaurants and 4.2 percent at domestic franchise units. Those results are on par with comp-store sales gains of 5.4 percent and 4.1 percent, respectively, reported by the company for the first nine months of 2018. Development is up, too: Texas Roadhouse was on track to add 28 new units in 2018 and plans another 25 to 30 new company stores this year. You might even snag Applebee's. Last October, the leading casual-dining brand reported its strongest quarter in 14 years. Domestic same-store sales rose 7.7 per- cent in the third quarter and 5.5 percent over the first nine months of 2018. That compares to domestic comp-store sales declines for the brand of -5.3 percent and -5.0 percent, respectively in FY 2017 and 2016. With guest traffic growing and marquee brands like his regaining steam, Stephen Joyce, CEO of Applebee's parent Dine Brands Global, calls reports of the death of casual dining simply "false news." Recent Datassential Inc. research appears to bear out his assertion. According to the firm's 2018 Casual Dining SNAP! Keynote Report, half of casual-dining operators say sales are higher than a year ago and more than two-thirds expect their sales to increase in the year ahead. Consumer data in the report also support the case for the segment's comeback. Consider: • 47 percent of consumers visited a casual-dining restaurant in the prior month. • 62 percent of consumers visited for dinner. • 82 percent say they've either increased (28 percent) or maintained (54 percent) their casual-dining visitation or ordering compared with a year ago. • 29 percent expect their casual-dining usage to increase in the next year, versus 9 percent who anticipate their use will decrease. Deliverance Ahead? "Things are starting to look up a bit," says Claire Conaghan, syndicated group manager at Chicago- based Datassential. "Our research included 1,000 consumers and more than 160 casual- dining operators, who have a mostly positive outlook right now. A lot of that has to do with opportunities that they see in takeout and delivery." The report shows that off-premise is, indeed, picking up: 44 percent of casual- dining operators now offer delivery and another 17 percent say they plan to add it in the coming year. And, while packaging and delivering menu items that weren't initially conceived to travel well is a major challenge for the segment, delivery customers seem happy with the early efforts. "Eighty-seven percent of consumers rated their last delivery experience within the past month from a casual-dining restaurant as either excellent or very good," says Conaghan. She notes that some casual-dining companies are investing a lot of research, design effort and innovation into creating systems that work for takeout and delivery, citing Buffalo Wild Wings (BWW) and Bloomin' Brands as examples. Bloomin' Brands, for instance, has opened combined Out- back Steakhouse and Carrabba's Italian Grill locations that only offer takeout and delivery. And BWW last year rolled out a new, more compact takeout and delivery-centric prototype with clearly designated counters for off-premise order pick-up and smaller on- site dining rooms. And the chain is among the first to start testing

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