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Casual dining on life support? Not this week

Early Q1 earnings reports show some big-name players reaping the benefits of programs that began long ago.

Outback Steakhouse notched a 4.3% pop in same-store sales for the first quarter, the upswing from a 2.2% traffic gain. BJ’s Restaurants posted a 4.2% increase in comps, as well as a rise in visits, and The Cheesecake Factory generated a 2.1% uptick for established stores. For a segment some dismiss as a graveyard, casual dining is looking remarkably robust as the first public players air their Q1 results.

So what’s been the miracle tonic?

Not trying to come up with one, say the big names that have reported so far.   

All are quick to note they’re outperforming the segment as a whole, so it’s not a matter of a rising tide. Rather, they point to strategies that were drafted and implemented sometimes years ago, and are now starting to pay off as intended.

Outback parent Bloomin’ Brands was asked to pinpoint the main factor for its workhorse brand’s strong start to the year. No can do, responded CEO Liz Smith. She noted such diverse drivers as exterior updates and the relocation of some stores, along with the addition of delivery at more units and increased membership in Bloomin’s cross-brand loyalty program. It’s a matter of turning the momentum, she suggested, rather than some silver bullet. She noted that $40 million has been invested over an extended time frame in customer-facing initiatives.

Similar comments were heard during the conference calls between analysts and the leaderships of Cheesecake and BJ’s.  

The strategies now paying off were different from chain to chain. BJ’s, for instance, cited the impact of a new slow-roasted meats menu, a differentiator that required a yearlong program of retrofitting kitchens and retraining staff.

Bloomin’s Smith noted that Outback’s seafood sister, Bonefish Grill, posted essentially flat comps, a marked improvement for that brand, in part because of a return to allowing individual units to choose what fresh fish to offer as daily specials.

But all of the casual operators reporting this week noted the considerable sales lift they’re getting from off-premise consumption. Cheesecake CEO David Overton, who once commented that he couldn’t see his brand doing delivery, noted that 95% of the company’s restaurants now offer the service through third parties, and all feature online ordering. President David Gordon said that 60% to 70% of that business is incremental.

Bloomin’s Smith cited research that shows nearly a third of millennials have food delivered from a restaurant at least once a week, while half of baby boomers order it less than once a month. “The potential for off-premise and delivery provides a large and incremental tailwind for casual dining,” she said in the scripted portion of Bloomin’s conference call with analysts.

She noted that 240 of the company’s restaurants currently offer delivery, and said the tally will increase during the rest of the year.

BJ’s off-premise business rose 30% year over year during Q1, and now accounts for 7.5% of sales overall, said CEO Greg Trojan.

He noted a recent promotion with DoorDash whereby delivery customers were given the incentive of getting a free mini pizza with each order. “We drove huge awareness of our delivery capabilities,” Trojan commented.

BJ’s and Bloomin’ also cited the beneficial effects of their loyalty programs. Bloomin’ offers one program across all of its casual brands, and membership now tops 6 million, Smith said. “This program is performing well and driving strong engagement across the portfolio,” she said.

Trojan said that participation in his charge’s new loyalty program is growing at a rate in double digits. The program was introduced just a few weeks ago.

Two other sizable casual-dining operators, Chili’s parent Brinker International and Applebee’s brand owner Dine Brands, are scheduled to post their Q1 results next week.

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