After Slow Growth Big Boy Revamps
Big Boy Restaurants International LLC, a doyen of the milkshake and double-decker burger meal, is battling to survive as the economy ravages family dining establishments.
The Warren-based chain of restaurants famous for its rotund, burger-bearing mascot in red-and-white-checked overalls turns 75 this year, keeping pace with the age of its core demographic: seniors who enjoy lingering mornings over an inexpensive plate of eggs and hash browns.
But Big Boy executives say they must reach out to families with children to cultivate the next generation of customers.
As part of that effort, Big Boy this summer launched a pilot program to refresh its menu and décor at a Clinton Township restaurant— providing promising early results that it hopes can be adopted throughout the chain.
"It was old, it was tired and Big Boy is that way throughout the state," says CEO Keith Sirois of the flagship restaurant.
"We're showing our age."
Other types of restaurants also are eating the lunches of Big Boy and its competitors in the mid-priced family dining segment, including Denny's and IHOP. Faster, cheaper eateries and more upscale restaurants that serve alcohol have outperformed family restaurants in the past year, according to the NDP Group, a New York-based consumer and retail market research consultant.
As a result, Friendly Ice Cream Corp., another burger-and-milkshake institution, one year older than Big Boy, filed this month for Chapter 11 bankruptcy protection.
The family restaurant category posted year-over-year growth at less than half a percent, lagging far behind every other dining segment, according to trade magazine Nation's Restaurant News. Big Boy's task is to differentiate itself from competitors in its own segment as well as "fast casual" eateries such as Panera Bread and Chipotle, and casual restaurants including Applebee's and Outback Steakhouse.
And all restaurants are squeezed by rising prices of commodities — such as eggs, tomatoes, lettuce and meats — and customers who are still watching their wallets.
"How do you offer a more contemporary higher-quality experience without raising menu prices?" says restaurant analyst Mark Kalinowski of Janney Capital Markets in New York.
"It's easy to say but very difficult to do."
Big Boy executives have high hopes for their pilot program, which involved pouring $400,000 into refreshing the flagship store on Hall Road in Clinton Township while overseeing remodels at another corporate-owned store in Rochester and three franchisee-owned stores in Troy, Madison Heights and Warren.
The flagship refurbishment was completed in July and "far exceeded our expectations," Sirois said. The menu now includes healthier fare such as lemon pepper cod, yogurt and turkey and turkey sausage as well as a larger selection of build-your-own and regional-themed burgers, such as the Michigan Classic, the original California with Red Relish and the Ohio Big Boy with White Sauce.
Management expected year-over-year sales to grow 15 percent, and "we're pretty close to twice that," says Sirois.
"I'm hoping this kicks off a refresh of Big Boy across the state."
But Senior Vice President of Marketing, David Crawford, acknowledged that some franchisees may not afford the remodeling costs. Close to 100 of the company's restaurants are owned by franchisees. The corporation owns 20 stores.
Catering to Customers
Customers cut back on beverage and dessert orders during the recession, a habit that appears to be sticking. That's why Big Boy this summer unveiled a selection of mini-desserts for $1.99, including a hot fudge cookie sundae, that seem to be appealing to customers, Crawford said.
Other changes are afoot. The company closed @burger, its fast-casual better-burger prototype in Ann Arbor after just a year, but found success with a smaller format Big Boy prototype in Grand Rapids.
"Big Boy lacks a niche in the family dining segment, despite its history and recognizable logo," says Ed Nakfoor, a brand consultant in Birmingham.
"I don't know what Big Boy stands for," says Nakfoor.
"It's not kitschy or retro. When I think of Big Boy, I draw a blank, and I think that's the problem for a lot of people. I would like to see them step it up a bit."
The company was founded in Glendale, Calif., in 1936 and sold to Warren-based franchisee Elias Brothers in 1987. The business was renamed Big Boy Restaurants Intl. after emerging from bankruptcy in 2000 and now includes 118 restaurants in Michigan, two in Cleveland, one each in Illinois and North Dakota and 16 in California, where the chain is known as Bob's Big Boy.