Rewriting the restaurant textbook

In case you’re keeping score: Mark Day One of the Restaurant Leadership Conference as a clear victory for industry heretics.

Long-held tenets of the business were refuted without mercy by presenters hailing new realities for an industry still resettling after the Great Recession. The drumbeat was loudest during one of the annual conference’s traditional big draws, an overview of restaurant dynamics aptly titled this year, “New Game, New Rules.”

Hosted by Technomic, the session chipped away at conventional wisdom. Fine dining, for instance, was cited as one of the business’ stronger sectors, a challenge to the widely held belief that the market has been stuck in a near-death experience since rosier economic times.

The change in fortunes has come in part from a downsizing of the segment to match diminished demand, explained Technomic Executive Vice President Darren Tristano. He also mentioned solid spending by platinum-card-toting consumers.

Technomic also found in its research that the highest stratum of casual dining, the layer known as polished casual, is outperforming lower-priced levels of the full-service market. The dynamic is similar “to what fast casual found five or 10 years ago,” or consumers’ avid embrace of a much better experience for just a few dollars more, Tristano commented.

The revelation, supported by Technomic data, runs contrary to the experiences of Red Lobster, Olive Garden, Ruby Tuesday and the other mass-market casual brands that tried recently to shift upmarket. The financial results usually prompted the upscalers to shift their emphasis back to bargain pricing.

The session highlighted a number of other updates restaurateurs might want to pencil into the margins of the industry textbook, including …

Expansion can be a sales drawback. Although Technomic expects chains’ revenue growth near-term to come primarily from the opening of more stores, it noted the likely negative effect on same-store sales. “Slower unit expansion boosts per-unit sales,” said Tristano. “The more you expand, the more you cannibalize.”

Spice cravers might not be whom you think. The customers who want more kick to their food aren’t the young men who wolf down Buffalo-style chicken wings or chipotle-laced nachos, as many operators contend. “When we go a little deeper it’s the Hispanics and women who want the spice,” Tristano said.  He urged attendees to stay a step ahead of the adventurers searching for new sources of heat and depth of flavor. “Sriracha on the Subway menu—it’s over,” he joked.

Big burger chains have gone from engine to caboose. “What you’re seeing there is some contraction” in sales, said Tristano. “These chains are not driving the growth [in the limited-service sector] anymore.”

Alcoholic beverages are fueling full-service sales. In a flashback to the 1970s, drinks are once again what pull consumers into sporting bars, but this time the bait is craft beer. And the responders aren’t just twentysomethings, according to Technomic. “People like us with kids, we need a lot more alcohol,” said boomer Tristano.


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