The first glimpse at how restaurants fared in July is a sobering one, with sales, traffic and average check all slipping further than they had in prior months. It shouldn’t be a surprise, then, that some big-name operations are looking further afield for ways to remedy the business.
Yet how can an observer’s head not be turned by the novelty of this week’s moves? When, for instance, did chains get involved in housing programs? Or start sporting two sets of prices—one for on-premise dining, another for off-premise?
Here’s a look at some of the more startling moves.
1. Chili’s slims down here, fattens up there
After posting a 6.5% traffic decline for the second calendar quarter, the workhorse brand of Brinker International will switch to a new menu next month that features 30-40% fewer items, Brinker CEO Wyman Roberts revealed. The focus will be on the Chili's longtime signatures: burgers, fajitas, ribs and margaritas.
The move is intended to speed up service and get food to customers before it starts cooling, but Roberts said the brand is also seizing the opportunity to upgrade Chili’s food. He cited the example of a change in the brand’s rib specs. Going forward, the ribs will sport 30% more meat, but the price remains the same as it was for the prior skimpier version.
The plan to revive traffic is based on the strategy that worked well for Maggiano’s, Roberts said. That Brinker holding posted a same-store sales gain of .5% for the quarter ended June 28, though traffic declined 2.1%.
2. Buffalo Wild Wings tries different delivery prices
Like every other restaurateur using third-party delivery services, Buffalo Wild Wing’s largest franchisee winces at the fees it pays the outfits. Diversified Restaurant Holdings says it gives those third parties about 20% of a delivery sale.
It’s a common complaint, but DRH decided to do more than just gripe. The 64-store operator has raised the prices for delivered food by about 10% “so we can protect our margins,” said CEO David Burke.
The higher prices also help to offset the loss of beverage and appetizer sales, he said.
Although many operations have aired the possibility of charging a premium for delivered food, DRH is believed to be one of the few operations outside of the pizza market that has actually done it.
3. Noodles & Company banks on mac and cheese
The struggling fast-casual brand revealed this week that macaroni and cheese will figure largely in the chain’s turnaround effort. The recipe currently in use will be tweaked to yield what CEO Dave Boennighausen calls a “back-to-basics, amazing, craveable flavor,” and the chain will introduce a separate mac and cheese menu in October.
Included, he said, will be Truffle Mac, a discontinued item that is most requested by guests, and such riffs as Barbecue Pork Mac and Buffalo Chicken Mac.
Boenninghausen noted that mac and cheese is already ordered by about 20% of guests, making it the chain’s best-selling item.
4. Chipotle as housing aid?
The challenge of recruiting restaurant workers can be particularly tough in areas where housing is expensive. Why work someplace where most of your income is eaten up by rent?
That’s why a pilot program in Denver is getting so much attention. The city announced last month that it intends to rent 400 apartments as they become available and then offer the housing to lower-income individuals at a reduced rent. The difference between what the landlord charges and how much the sublet tenants pay will be provided by the city.
The attention jumped further when the Denver Post revealed this week that another party was in discussions with Denver Mayor Michael Hancock about participating in the program: Chipotle Mexican Grill.
The fast-casual chain is negotiating to become the first of what Denver hopes will be a parade of “employer partners” who want to expand the local labor pool, according to city officials. The story speculated that Chipotle employees could be given first rights to some of the 400 apartments.
Chipotle is based in the Denver area.
5. Texas Roadhouse aims to increase labor costs
Ever the contrarian, Texas Roadhouse alerted investors this month that it feels no imperative to check rising labor costs, as virtually every other chain is striving to do.
“As a matter of fact, we're actually challenging our operators on how well they're staffed,” said President Scott Colosi. “We're asking them, maybe they should staff with more people.”
If a server has to handle only two or three tables, maybe he or she could talk to the guests instead of dashing around, he explained.
More staff would also provide more flexibility and options when someone wants to take time off, and that’s a big advantage in recruiting the best people, Colosi suggested.
“So sometimes hiring more people, which [means] more training cost and so forth added to that labor line, makes it stronger in the long term,” he said.