Full service sputters on

Some big players are slowly starting to show signs of life, while specialized regional concepts are very much alive.
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top 500

It was more of the same story for casual dining in 2018. While year-over-year sales growth was in the green, increasing 1.1% last year, the results were still a mixed bag. The 26 casual-dining chains among the top 100 largest restaurant brands stayed essentially flat, growing just 0.4%. 

Midmarket concepts such as Ruby Tuesday, TGI Fridays and Red Robin continued to struggle, while big players such as Applebee’s and Olive Garden showed some signs of life. But it’s the small, regional chains that put out double-digit growth. 

Baton Rouge, La.-based Walk On’s Bistreaux & Bar (No. 294) saw a 56.6% bump in sales in 2018. And Asian concepts Jinya Ramen Bar (No. 435) and Kura Revolving Sushi Bar (No. 485) both grew nearly 40% year over year.

The biggest chain to claim nearly double-digit growth? No. 26 Texas Roadhouse, which saw sales climb 9.8% in 2018. (And the company’s emerging Bubba’s 33 sports bar concept (No. 359) grew 24.1% during the same period.)

And that growth is all coming as Texas Roadhouse bucks the delivery trend. CEO Kent Taylor famously encouraged competitors to “do as much delivery as they can so they can deliver lukewarm food to the people who order it,” on an earnings call in 2017. “We’ll stick to our guns on this,” he said. And the company has done just that, remaining one of the few major casual-dining brands not to work with third-party delivery companies.

As most other chains work to build their off-premise business to suit dine-in-averse consumers, though, there’s a bright spot on the horizon for the casual-dining sector in the form of catering. “Catering remains very low-hanging fruit,” said Steve Joyce, CEO of Dine Brands Global, franchisor of Applebee’s and IHOP, to investors earlier this year. “We haven’t really even scratched the surface of the catering opportunity in both brands, so we just think that’s a big opportunity for us.”

For some chains, the sheer magnitude of the traditional casual-dining menu is complicating catering. That’s a hurdle for BJ’s Restaurants & Brewhouse, CEO Greg Trojan told investors earlier this year. The breadth of the chain’s menu, an advantage for dine-in, becomes a stumbling block when it’s time for mom and dad to place an order to feed the team or for an office manager to order lunch for 20, Trojan said. “We think we have frankly some screaming values in the large party offerings, but I think we haven’t done as good a job yet of communicating those offerings and that value yet, and that’s what we’re working on,” he said.

Mixed results for midscale

Midscale chains, largely family-style concepts with a heavy emphasis on breakfast, had a topsy-turvy 2018. The category’s biggest players, including IHOP, Denny’s and Cracker Barrel, averaged 3% sales growth year over year. All of these chains are struggling with high labor costs and the need to capture consumers who’d rather eat pancakes at home than in a restaurant.

Bob Evans, meanwhile, saw sales tumble 6.7%, and sales fell 3.7% at Perkins Restaurant & Bakery.

Among the bright spots in Technomic’s Top 250? The standout was 295-unit First Watch, where sales rocketed 31.9% above the previous year. Also thriving was 120-unit Black Bear Diner, where sales grew 15.8%

Are expense accounts heating up?

Fine dining remains a small piece of the full-service pie, but it grew modestly (3.3%) in 2018. Growing concepts such as BLT Steak & Prime, Il Mulino, Perry’s Steakhouse & Grille and Mastro’s Restaurants notched double-digit sales growth, managing to navigate a tight labor market and off-premise boom.

But some white-tablecloth stalwarts had trouble weathering the current market. Sullivan’s Steakhouse, which was sold last year by Del Frisco’s Restaurant Group to Romano’s Macaroni Grill, continued to struggle, posting a 17.2% drop in sales and 13.3% decline in units in 2018. The chain made just $56 million, down from the $83 million it earned in 2013.

Source: Technomic Top 500 Chain Restaurant Report

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