Don’t suggest to Chris Tomasso that the chain he heads, First Watch, is part of the family dining segment. Sure, as a brand that shuts down mid-afternoon, it vies with the likes of Denny’s and IHOP for breakfast fans. But, as the CEO stresses with considerable fervor, it doesn’t come close to fitting your grandfather’s impression of where to go for pancakes.
Just consider what’s in patrons’ glasses. It may well be a cocktail, now offered at more than 305 of the chain’s 440 units, with the rest expected to add alcoholic options by the end of the year.
And it may not be plain old OJ the teetotalers are sipping. According to Tomasso, a cult following has developed for a First Watch alternative called Purple Haze, a lavender lemonade blended with pea-flour tea. Patrons with a headier desire can indulge in what First Watch calls its Morning Meditation Juice.
Patrons can nurse the New Age-y quaffs while perusing the brand’s menu of seasonal specialties, from Florida strawberries to Elote Mexican Street Corn Hash.
“We cannot be easily defined, and that is because we offer a highly differentiated experience,” Tomasso told the investment community.
The brand is not alone in trying to provide consumers--and younger, more affluent ones in particular—with new, more contemporary morning options.
For one thing, whatever label is given First Watch’s competitive set—Tomasso prefers the tag “daytime dining”—it’s a packed sector getting more crowded by the day. Fast-growing direct competitors like Snooze, Another Broken Egg and Eggs Up Grill support the First Watch chief’s assertion that a new, more upscale class of concepts is emerging.
Menus are clearly a major way of appealing to those younger and more upscale patrons. Let mom and pop have their Grand Slams. A Snooze visitor might want to indulge in a more ambitious selection like the $20 crabcake benedict. Brunch specialist Ruby Slipper Café offers a grilled fish of the day served over “a cheesy grit cake” with sauteed spinach and tomato and a skewer of grilled shrimp, all accented with a creole mustard hollandaise sauce.
But the new wave also strives to deliver a different sort of vibe. Ruby Slipper promises a weekend brunch experience every day of the week, with up to 30% of its $3 million average unit volume coming from alcoholic beverages.
The mix can run as high as 20% at Snooze. “The first thing you notice when you walk into a Snooze is the bar,” says CMO Andrew Jaffe.
Snooze lets customers know that 1% of sales are channeled back into support for the community. Patrons also learn that all ingredients are Snooze approved, meaning the company has verified that they’re produced responsibly by respectable providers, and every unit composts what it can, with a goal of getting to zero waste.
“Every one of our restaurants has what’s called a changemaker. They’re responsible for being a leader of our waste reduction and compositing efforts,” says Jaffe.
The employees, known as Snoozers, are reassured that they don’t have to hide their tattoos and piercings, and every executive is known by a nickname, either given or self-generated.
“We let them show up as who they are,” says Jaffe, a.k.a. The Wheel, so called because he’s seen as being in the middle of everything.
“Customers are moving toward a value-focused mindset,” The Wheel continues. “What we’re seeing is the value of the guest who’s far more values-based.”
‘Get off of my turf’
The old guard of family dining chains isn’t rocking on the porch while upstarts try to steal their a.m. business. Denny’s, the leader of the traditional segment, announced two months ago that it was acquiring a daytime dining upstart, 52-unit KeKe’s Breakfast Café, for $82.5 million. That price is 12 times KeKe’s EBITDA, or earnings before interest, taxes, depreciation and amortization, according to Denny’s.
In announcing the deal to Wall Street, then-CEO John Miller noted the chain’s appeal to “millennials and Gen-Z families with kids whose household income levels skew above $75,000.” Its entrée prices are about 20% higher than Denny’s, Miller added.
Keke’s marketing slogan: “It’s like your hometown diner grew up and went to the city.” The breakfast menu consists mainly of a.m. standards, but with an emphasis on fresh ingredients.
Arch-rival Cracker Barrel has similarly armed itself with a spiffy young daytime dining concept, Maple Street Biscuit Co., which it acquired in late 2019 for $32 million. Cracker Barrel had already explored the growth potential of the daytime market by launching an entrant of its own called Holler and Dash, which many observers likened to the older Maple Street brand. That venture was folded into Maple Street, which had about 28 units at the time.
In explaining the attraction of the Southern-flavored upstart, Cracker Barrel CEO Sandy Cochran stressed to investors that Maple Street provide the company with “increased exposure to urban and suburban markets and to the millennial and Gen Z cohorts.”
Cracker Barrel has since expanded its new growth vehicle to 50 locations and hired a well-known, deeply experienced industry veteran, former Panera COO John Maguire, to serve as the younger concept’s president.
But its efforts to court a younger, more urban (and urbane) clientele hasn’t ended with that venture. The company is also trying to heighten the appeal of its core brand to that group through a number of significant changes to Cracker Barrel’s breakfast menu.
Executives revealed last month that the company had conducted a six-month study of customers and non-users in a quest for more traffic. The chain has acknowledged that transactions were dampened during the first quarter of 2022 by the reluctance of patrons over age 65 to dine out while coronavirus still poses a health threat.
Those customers will eventually resume their former habits, the officials assured investors. But they noted the potential to grow traffic by drawing more heavily from the 25-to-44-year-old cohort, which currently constitutes about 30% of the Cracker Barrel brand’s clientele.
The biggest change in the a.m. bill of fare has been the addition of a build-your-own breakfast option, which allows patrons to customize their meal.
For further personalization, patrons can opt for new premium sides such as Impossible Foods’ plant-based sausage or a spicy chicken sausage, each of which carries a $1.69 upcharge.
The potential add-ons include such departures for Cracker Barrel as a new pastry item called Biscuit Beignets, a cross between the Southern breakfast staple and New Orleans’ version of a cruller.
A line of seasonally changing lattes has also been added.
In addition, the 660-unit brand is also stealing one of daytime dining’s signature offers, the option of having an alcoholic beverage with a meal. It is currently introducing beer, wine and pre-made cocktails like mimosas, with more exotic choices in the works. Management says the beverages should account for about 2% of sales after the rollout is completed.
“We believe that the things we're doing should resonate both with our core guests as well as the other groups we were trying to attract,” Jennifer Tate, the company’s CMO, told financial analysts.
Chasing the breakfast leaders
U.S. systemwide sales, in $ million
Source: Technomic, company reports
Arch-rival IHOP is also exploring the addition of alcoholic beverages. It’s now offering beer, still and sparkling wines at about seven stores, according to the brand’s website. The family dining chain said when it commenced a three-unit test of alcoholic beverages last year that the availability of adult beverages is particularly appealing to consumers aged 21 to 34, a source of growth for the brand.
Meanwhile, IHOP is presenting a fresh face to urbanites and suburban residents through the development of a fast-casual riff called Flip’d by IHOP. Originally, the strategy was to use the scaled-down concept as a way of going head-to-head with such hip inner-city brands as Pret A Manger or Au Bon Pain. But after the pandemic kept many downtown office workers at home, IHOP decided to broaden its development scope to include more residential areas.
The morning options available at Flip’d include The Cali, a sandwich of scrambled eggs, avocado, arugula, roasted tomatoes and Jack cheese served on a brioche bun. It also features a plant-based egg substitute and a sausage custom-made out of pea protein for the brand, neither of which were available at an IHOP, according to a Flip’d franchisee.
Village Inn gussies up
The attempt to make family dining concepts cool again hasn’t bypassed Village Inn, another greybeard in the segment Tomasso views as being as different from daytime dining as a black-and-white set is from an HDTV
Now owned by BBQ Holdings, the parent of the Famous Dave’s and Chammps casual-dining chains, the 64-year old all-day concept has outfitted a new branch with a menu that includes such upscale items as acai bowls, avocado toast and cheesecake French toast.
“It’s a whole new elevated upscale-type breakfast concept,” BBQ CEO Jeff Crivello told Restaurant Business.
Like a First Watch, the store in Maple Grove, Minn., will cease service in mid-afternoon, or at least sort of. In the evening, the facility will swap out its Village Inn menu for the bill of fare of the other concept sharing the space,Granite City Food & Brewery, another brand in BBQ Holding’s portfolio.
With a full bar in place at the brewpub, the availability of adult beverages is a given.
Crivello expects the addition of the updated Village Inn menu to push sales about 25% above what the Granite City host store has been generating without breakfast.
If the co-branding venture should work, BBQ will duplicate across other restaurants in its portfolio, which includes Tahoe Joe’s and Craft Republic, according to Crivello.
“If it doesn’t work, it doesn’t work. But at least we tried,” he said.
Old brands, long-running new tricks
Tomasso also holds that a concept doesn’t have to be just out of the cradle to present a fresh face at breakfast, his charge being a prime example.
“We're in the position we are today because of how we came to be back in the early ‘80s,” he says, noting that he joined the operation 16 years ago.
Indeed, he told financial analysts, the breakfast-and-lunch chain didn’t set out to be an edgier alternative to all the stools-and-counter places that were slinging eggs and hash 24/7 back then. “The fun side of the story of our beginnings and our daytime only hours is that our founders wanted to be able to play golf in the afternoons,” he explained.
The key point of difference wasn’t even intended to be the limited hours, which have proven today to be an aid in recruiting employees.
Rather, the links-loving founders “were taking an approach to the menu that was focused on freshness, quality, and creativity, which back then and still today was a stark contrast to the diners and greasy spoons around the block.”