Peter says:
Nancy, if I had a bitcoin for every time I’ve heard the industry gush about the pandemic’s boost to off-premise business, I’d be close to your income bracket by now. I might even have enough digital dough to fund research into restaurants’ underappreciation of the other gale-force tailwind coming out of the crisis, the revival of experiential dining.
We forget that a notion was taking hold before March 2020 about casual dining being squeezed into obsolescence by the combination of third-party delivery services and the proliferation of fast-casual brands. The plight of eatertainment places looked even bleaker. Consumers seemed more interested in nesting in front of their 96-inch flat screens, a PS-5 controller in hand, than in sucking down a few margaritas while awaiting their turn to shoot dinosaurs in a virtual reality game.
Then COVID-19 forced the shutdown of dining rooms and arcade areas. Full-service places of all stripes seemed certain to be among the plague’s casualties. A deal to buy TGI Friday’s, the granddaddy of casual dining, fell through because of what the would-be buyers politely called “extraordinary circumstances.” Ruby Tuesday’s, a brand nearly as old, filed for bankruptcy protection.
So did the pizza specialists California Pizza Kitchen and Chuck E. Cheese’s. Meanwhile, quick-service pizza players like Domino’s and Papa John’s were setting new sales records because of surging off-premise business and the convenience they offered.
Dave & Buster’s cut its menu at one point to four items and continued to explore the possibility of putting a quick-service concept inside its cavernous grub-and-games facilities.
Look at the experiential sector now. Dave & Buster’s same-store sales for the third quarter of 2021 were up 697%, according to RB’s Same-Store Sales Tracker. STK, the high-end steakhouse, posted a comp surge of 130%. Even Cheddar’s Scratch Kitchen, the casual chain that's seemed immune to Darden Restaurants’ Midas touch, saw a 65.8% surge.
Granted, to-go sales factor into those figures, and the increases are year-over-year, which means they’re lifted by the depressed results for 2020. But fine dining chains, or what some of us regard as polished casual brands, are collectively up 12.4% on a comparable basis from two years ago. There is no doubt that casual dining is back and stronger than ever, largely because customers are eager and willing to pay for the Full Monty of a dine-in experience.
Indeed, operators tell us that sales of adult beverages have been particularly strong, a pleasant surprise they attribute to pent-up demand among patrons to socialize and take in the experience of being part of a social scene. It’s not a surprise that Yard House, Darden’s beer-centric concept, generated a 65.8% jump in comps for Q3.
We think dessert sales may be on the rise for the same reason. People want to prolong the conversations and people-watching they were denied because of coronavirus safety protocols.
Meanwhile, the eatertainment segment is poised for better days than it’s seen since Arnold Schwarzenegger was a pitchman for Planet Hollywood. Consider just the number of golf concepts that are teed up for expansion. Duffers can whack some balls and sip a few cocktails at Five Iron Golf and Topgolf, both backed by equipment maker Calloway Golf; Puttshack, a European import founded by Topgolf’s creators; and Puttery, which is backed in part by Rory McIlroy. Five Iron, Puttshack and Puttery have landed expansion capital this year of $30 million, $60 million and $10 million, respectively.
We’re also seeing places open to capitalize on the pickleball craze.
And let us not forget the ongoing proliferation of eating and drinking places that are adding axe and hatchet throwing as a customer draw.
You know, we may want to continue this conversation at one of those places. I suspect you’ll propose that I be the catcher.
Nancy says:
You’re right, Peter. If I had a bitcoin for every gush about soaring off-premise sales, I’d doubtless have a bitcoin bonanza. But I still wouldn’t know what the heck the darn things are or how to use them.
Nonetheless, I do get your point: COVID-weary consumers are looking for an affordable escape, and the restaurant industry is perfectly positioned to deliver by doubling down on the experiential. And while the once moribund eatertainment sector recapturing its mojo is good news for sure, I’m more interested in the conventional operations that are actively amping up the experience factor to differentiate their brand and drive their business.
The recent past has been chockablock with examples, like P.F. Chang’s, which dazzles diners at its Waikiki and Las Vegas Strip locations, where revamps include dramatically redesigned interiors and a menu that brings the action tableside with dishes like Fire and Ice, a dessert that is ignited and served flaming. Speaking of flames, fondue specialist The Melting Pot just announced creative tweaks to its guest experience like Thursdate, a weekly promotion in which a four-course fondue meal is served on a table strewn with rose petals and illuminated by candles.
Meanwhile in the oft-dismissed family-dining segment, Black Bear Diner is doing nicely with its distinctive, backwoods decor and jukeboxes. The menu plays comfort foods’ greatest hits like pot roast and chicken-fried steak, while nodding to the trends with avocado toast and a veggie burger. It’s worth noting that the operation changes up its lighting, music and server uniforms after 4 PM to add luster to its dinner service.
It’s not just full-service restaurants that are upping their experiential games: Limited serves are jumping onboard, too. Take Panera Bread, which recently unveiled a next-gen cafe that encourages diners to “immerse themselves in the baking experience.” Said immersion is facilitated by the repositioning of the bakery ovens to the front of the store, where patrons can watch bakers in action and enjoy the wafting aroma of freshly baked bread. In a similar vein, when Papa Johns rebranded last fall, in addition to removing the possessive apostrophe from its name, the chain also changed the store design, opened up the kitchen and added the inviting phrase “Welcome to the Dough Show” above the counter.
Still another company that’s going all in is NRD Capital Management LLC, which announced in October the formation of Experiential Brands, a platform company that will acquire operations that live up to its name. Exhibit A is its flagship Fuzzy’s Taco Shop, which fills the bill with its laidback, Baja-beach vibe and unique items like Tempura Mahi Taco and signature Butt Burnin’ Hot Sauce.
As a quick sidebar, lots of other consumer-facing businesses are also getting in on the action. The Fresh Market supermarket chain reworked its original store layout to create a “restaurant experience” for shoppers, which include a coffee roastery and cafe and store-baked biscuits. And a press release from the Four Seasons Hotel in Chicago touted a multi-million-dollar renovation, the objective of which is “elevated experiences” for its guests. A cornerstone of the effort is the new Adorn Bar & Restaurant, opened by James-Beard winning chef Jonathon Sawyer.
By now you must have noticed, Peter, what all these disparate businesses have in common, namely the importance they place on food and beverage. This naturally gives restaurateurs a leg up, since food and beverage is their bread and butter. Plenty of smart operators have been working overtime on menu items that are experiential, the ones that showcase their expertise and evoke a “wow” from customers. The good news here is that there’s no need to invest big bucks in overhauling interiors or adding putting greens or movie screens. There are almost as many opportunities as there are operators: Think global accents, elevated comfort food, vegetable-driven dishes, pretty plate presentation, regional specialties, virtuoso technique and on and on. We’re talking stuff that consumers don’t do at home, that are basic to the menu R&D playbook and that automatically enhance the customer experience regardless of service style or segment.
Premium ingredients are among the most popular tactics, and lately they’ve been getting quite a workout, as menu developers have wielded truffles and lobster with abandon. Premium proteins score, too, as with BurgerFi’s SWAG (Spicy Wagyu) Burger LTO, which was promoted by lifestyle maven Martha Stewart, or IHOP’s Bacon Obsession menu, which starts with whole pork bellies sliced into “steaks” in each of the chain’s kitchens.
The participation of a celebrity chef adds instant culinary cred and ups the menu experiencequotient as well. Smashburger’s current Chorizo Cheeseburger by Rick Bayless includes Mexican-style chorizo and a chipotle bun sanctioned by the Mexican-cuisine guru. Even better, diners can elect to donate to Bayless’s Frontera Farmer Foundation to support small farmers.
Arguably nothing conjures a satisfying menu experience as much the application of technique; it’s culinary catnip for patrons and a failsafe value add for operators. Lucille’s Smokehouse Bar B Que char-grills hearts of romaine for the Caesar salad and slow smokes and grills the cauliflower steak. Both items play to the chain’s strength and elevate common items to a cut above.
Now if you still have an axe to grind, Peter, I invite you to join me at Bad Axe Throwing. It bills itself as the world’s biggest axe-throwing club and promises the thrill of a traditional Canadian backyard pastime, which totally changes my image of our neighbors to the north. Anyway, my local outpost is now serving beer and wine, so you’d best mind their dress code, which requires that you leave your open-toed shoes at home.