Top 500: 2021 was a mixed bag for casual dining

Chains that sold steak or an experience did well, but the segment as a whole has shrunk over the past two years.
Photograph courtesy of Cheesecakefactory

As pandemic restrictions eased and people got vaccinated last year, a lot of Americans went out to eat again. 

That’s clear from a glance at casual-dining sales, which rose by 30% year over year among chains on Technomic’s Top 500 ranking.

In fact, of the 182 casual chains on the annual list of the highest-grossing U.S. brands, all but two—Ruby Tuesday and Romano’s Macaroni Grill—outdid their 2020 sales performance. 

So the pandemic didn’t kill on-premise dining. At the same time, it would have been difficult for a sit-down restaurant not to improve after a year as bad as 2020, when casual-dining sales plunged more than 25%. And when you zoom out further, the results hardly signal a wholesale rejuvenation for the segment.

“As eye-catching as the percentage-change numbers look … cumulatively speaking, that volume failed to reach 2019 levels,” said Kevin Schimpf, director of industry research and insights for Technomic.

Indeed, casual-dining sales on the whole were still down about 4% compared to their pre-pandemic baseline, making 2021 more of a mixed bag for the group than it might appear. Nearly 70% of casual chains on the list had yet to return to their 2019 sales levels.

Casual-dining sales ($000)

Source: Technomic

One thing keeping a lid on sales is that there are simply fewer casual-dining restaurants than there were two years ago. More than 780 casual locations closed from 2019 to 2021, according to Technomic, a contraction of more than 4%.

“You’ve lost a good chunk of restaurants,” Schimpf said. “With that, it becomes harder and harder and harder to reach those sales volumes you’ve seen in previous years.”

Fewer restaurants is not necessarily a bad thing for a segment that was widely viewed as overpopulated, leading to years of stagnation coming into the pandemic. And some of the biggest chains are growing: Texas Roadhouse, Buffalo Wild Wings, Cooper's Hawk and Walk-On’s all opened a significant number of new stores.

And while it was a better year than 2020, 2021 had its own set of challenges that hampered operators. A historic labor shortage, supply chain problems and a series of COVID-19 spikes all took their toll on sales. Every time it felt like the segment was about to offer a clear picture of where it stood, a new problem would rear up to attach an asterisk to the results. 

Some chains were more susceptible to the pain than others. Brands with a large presence in California or New York, where pandemic mandates were more strict, were slower to recover, while those concentrated in the South faced fewer restrictions to begin with, Schimpf said. 

And when consumers did go out to eat, they tended to favor certain menu items, particularly steak. That’s evident in the results of Texas Roadhouse, up more than 23% compared to 2019, and LongHorn Steakhouse, up nearly 15%. Steak was the only full-service menu category to return to 2019 sales levels, according to Technomic.

After months of pandemic precautions, “people want to go out, they want to treat themselves, and steak is a nice way to treat yourself,” Schimpf said. 

Top 10 casual-dining chains

Source: Technomic

All of those issues, to varying degrees, held back overall casual-dining sales last year.

“It’s hard to pinpoint, what’s the worst thing?” Schimpf said. “Is it labor, is it closures, is it pandemic-related restrictions, is it weather, what is it? It’s probably all of the above.” 

The uneven environment yielded a “huge mix of results like we’ve really never seen before.”

A look at the top 10 casual-dining chains offers a snapshot of that volatility. Segment leader Olive Garden’s sales were down 4.5% compared to 2019, while its sister brand LongHorn Steakhouse saw sales rise 14.8%. Chili’s and The Cheesecake Factory had strong years, with sales up more than 5% at both chains, but their varied-menu competitor Red Robin was down nearly 10%. And Texas Roadhouse was in a league of its own.

Going forward, Schimpf believes consumers will be looking for either convenience or an experience when making their dining decisions. Casual-dining chains that lean heavily into the latter will be set up for long-term success, he said. But in general, the segment may struggle to build upon its pre-pandemic form.

“I think overall it’s going to look relatively stagnant, but within that kind of stagnant number, you’re still going to continue to see a lot of variance,” Schimpf said. “There are still growth chains out there.”

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