Restaurant Development & Design

JAN-FEB 2019

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3 4 • 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 • J A N U A R Y / F E B R U A R Y 2 0 1 9 The State of Casual Dining delivery of beer as well as food, a game changer for boosting the profitability of delivery for operators in this segment. BJ's Restaurant and Brewhouse, too, is innovating in the delivery space. The California-based chain recently integrated DoorDash into its website and app for a faster, more seamless experience than is often the case when utilizing multiple separate third-party providers. And in 2017, the chain began offering customers the option of adding canned or bottled craft beer and/or wine to their orders in select California markets. Last spring, it rolled out a new wine program for takeout and delivery, offering selection of five wines priced at retail-competitive $10 per bottle. But just as some leaders in the casual-dining segment are working to fully embrace and promote stronger off- premise sales with delivery, others have yet to get on board. Texas Roadhouse, for instance, one of the brighter stars in the segment, has eschewed delivery citing concerns over food quality and a negative impact on in-store operations. Olive Garden, which has seen solid success with takeout and with delivery of catering orders of $100 or more, isn't rushing headlong into mainstream delivery either. In a FY 2019 first-quarter earnings conference in September, Gene Lee, president and CEO of Olive Garden parent Darden Restaurants, said that despite some restaurant's attempts to ramp up delivery service with the help of third-party providers, he still has major reservations about delivery of small, individual orders. That's in part because of the 20 percent to 30 percent delivery fee such services take out of every order. But Olive Garden, which posted a 5.5 percent same-restaurant sales gain for that quarter and a 2.4 percent same- store sales growth for its full 2018 fiscal year, points to other concerns. "We're not sure that it enhances our brand," Lee said. "We're concerned about how it's executed; we're concerned if it can create incremental growth at scale; we're not happy with the economics." Rocky Road to Recovery Darren Tristano, CEO and founder of research and consulting firm Foodservice Results and former president of Tech- nomic Inc., cautions that casual dining's comeback has been and continues to be a rocky one. Many brands within the segment have shuttered, declared bankruptcy and/or have been acquired by stronger competitors or private equity firms and such announcements continue. "If I had to describe the segment even today, I'd say it remains oversup- plied," says Tristano. "A lot of units have closed, but there are still too many casual-dining restaurants out there with too many seats and not enough differentiation, particularly among the large chains. They're finally beginning to get more innovative and aggressive with things like delivery, but those fundamen- tal issues still plague the segment." Indeed, many survival tactics have been tried and many have failed. Among the biggest of those failures, in Off-premise business at Red Robin is growing, but, like many casual-dining players, the brand has struggled with trying to grow takeout and delivery without negatively impacting the dine-in experience. Image courtesy of Red Robin Gourmet Burgers and Brews Buffalo Wild Wings is seeking to reverse declining sales and traffic in part with a new, smaller prototype designed specifically to offer faster, more streamlined service for takeout and delivery orders. Image courtesy of Buffalo Wild Wings

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