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Black Bear Diner crosses the Rockies

The California-based family-dining chain is taking its expansion east.

Black Bear Diner wants to be a lot more than just a California company. And that means it has to get out of its comfort zone.

So the 106-unit family-dining chain recently opened a location in Oklahoma, its first location east of the Rocky Mountains, and the company plans to do more. It wants to use Oklahoma as a “hub” that will enable the company to expand in places like North Texas, Arkansas and Missouri. The chain also has leases signed in Houston.

“If we’re going to be a nationwide brand, we’re going to have to grow the brand outside of the West,” Bruce Dean, the chain’s CEO, said in an interview during the ICR Conference in Orlando, Fla., this week. “It’s a risky thing to take a brand where they don’t know you. But it’s doing well so far.”

To be sure, California and other Western states have so far been good for the 23-year-old brand, which was founded in 1995 in “a little mountain town in Northern California” called Mount Shasta.

The company’s founders, Dean and Bob and Laurie Manley, didn’t think they’d be founding a highly successful and fast-growing family-dining chain. “We never figured it’d be much other than a place to take our friends to dinner,” Dean said.

In 2016, Black Bear attracted a private-equity investor, the private-equity firm PWP Growth Equity. Last year, the chain brought in a new CFO, Anita Adams, who had worked with casual-dining chain operator American Blue Ribbon Holdings.

Black Bear is one of a new generation of family-dining chains that are taking share in a sector that had been something of an afterthought amid the so-called fast-casual revolution. But consumers in recent years have rediscovered such chains, and in particular their love of breakfast at any time of day.

“When I mention family dining to people, their eyes roll into their head or they fall out of their chair,” Dean said.

But Dean believes that his chain has thrived in part by focusing on something many of these other chains overlook: dinner.

“We serve dinner,” he said, noting that dinner is a $13 billion to $15 billion piece of the full-service pie. “It’s a great opportunity for us.”

Said Adams: “Our dinners have a lot of energy. There’s a jukebox and a really good vibe.”

Executives believe that energy and the company’s dinner business should help as it expands into new markets.

Adams called 2017 “a year of refinement,” such as developing a strategy for new markets. That included “going back to our heritage” as a company that opened locations in secondary locations. Such locations have become more available recently, as casual-dining chains close weaker units amid declining sales and traffic.

Such locations tend to be cheaper, and help Black Bear open a unit for about $1 million. “We can get into a better class of space at a great rent,” Adams said. And with average unit volumes of $2.6 million, “the returns are compelling.” Dean said Black Bear’s same-store sales rose 1% last year.

The company believes it should start seeing the benefits of its 2017 refinement efforts this year. Black Bear opened 21 locations last year, and expects to open about that same amount annually.

Still, the challenge remains the eastward expansion, into areas where Black Bear is not well known.

The Rocky Mountains are both a physical and psychological barrier that can make it difficult for California-based chains to grow as big as they seem. So it’s not uncommon for such chains to do little outside of those Western markets.

But executives note that the company’s menu of basic, everyday items like breakfast, burgers, meatloaf and country fried steak will work well outside of California. And the chain’s woodsy decor also works well all over the country.

“It’s not like we’re serving California cuisine here,” Adams said.

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