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The Palm Restaurant

Beefing Up the Midday Meal

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Steakhouses reclaim lunch hours with prix fixe promotions.
By Marilyn Odesser-Torpey November 2013 Chain Restaurants

Those lavish expense accounts that supported multi-hour, three-martini lunches in former decades won’t make a comeback any time soon, but two of the nation’s prominent steakhouse chains are banking on Americans’ desire to beef up their midday meal.

The Palm Restaurant has introduced an updated “Modern Power Lunch” designed to attract today’s time-conscious and budget-conservative business clientele. Tested in a few of the chain’s locations last year, the three-course prix fixe menu, priced $25.90, rolled out to 20 of its 26 U.S. restaurants in April.

“The Palm has always been associated with the power lunch, but now our business guests have different needs; they’re time-starved and often have to be back at their desks in an hour,” says Bruce Bozzi Jr., executive vice president and fourth-generation family member at The Palm. “More guests are also looking for healthier options for lunch, and we can accommodate that as well.”

For the three-course lunch, a pair of 4-ounce Filet Mignon Medallions speaks to the chain’s signature steaks. Other entrée options are Chicken Parmagiana, Atlantic Salmon Fillet, and a daily fresh fish special. To round out the meal, guests can choose from three starters, three sides, and two desserts.

In addition to the three-course meal, the menu also features soups, salads, and sandwiches (plus combinations of the three) under a “Quick & Simple” heading. Steakburgers are available as well as crab cakes, ahi tuna steak, a 9-ounce filet mignon, and a 14-ounce prime New York strip steak. For lunch, the price of the filet mignon was reduced to $29.90 from its regular $44.90 dinner price, and the strip steak to $34.90 at lunch from its $46.90 dinner price.

In the four months from the introduction of the Modern Power Lunch menu in April through July, lunch covers increased 4.7 percent, with the highest growth in April (7 percent) and May (12.6 percent). The Modern Power Lunch accounts for 25 percent of the entrées sold at lunch, and the Filet Mignon Medallions are the most popular, representing more than 43 percent of the Power Lunch purchases.

Spirits are also specially priced during lunch at 15 of The Palm’s locations, where a premium martini or 9-ounce pour of wine are offered at lunch for $8.37 (a unique pricing derived from the address of the original Palm Restaurant). Comparatively, dinner cocktail prices range from $12 to $13 and wine ranges from $9 to $32 for a 9-ounce pour. Among the restaurants participating in the $8.37 special, there has been an increase in wine and premium martini sales at lunch.

Lunch Demographics

Since the refreshed midday menu made its debut, The Palm has seen an increase in women and a younger generation of business men and women dining at lunch. “We think we can attribute this to the addition of new sandwiches, salads, and the Quick & Simple combinations,” Bozzi explains. “Dining habits at lunch have changed. Our goal with the new lunch menu was to add lighter fare while staying true to our ‘Big Steaks, Big Portions’ [mantra].”

The Palm supported its new lunch menu launch with a direct mail campaign to neighboring businesses. Facebook and Twitter have also proved to be effective promotional channels, and one of the most far-reaching promotions was an email blast to members of its 837 Club loyalty program. Begun in 1998, the loyalty program has more than 100,000 members “who let us know when something is working and when something isn’t,” Bozzi explains.

“They’re telling us now that they really love the price point and value of the three-course business lunch,” he notes. “They are also pleased with all of the options that the menu offers.”

The Palm’s new lunch menu is part of a multi-year effort by the brand, which was established in 1926, to refresh its image and offerings.

“It started as a discussion about our website and eventually encompassed over 200 items ranging from our wine and food menus to tableware and bar-staff uniforms,” says Bozzi. As the conversation broadened, it encompassed focus groups with both “Palm loyalists” and consumers who had never visited the restaurant—and ultimately it led to the introduction of the Modern Power Lunch.

Joining the Lunch Crowd

Increasingly, the full-service restaurant industry is embracing just how powerful the lunch daypart can be. Mike Kappitt, chief marketing officer of Outback Steakhouse, says, “Lunch is a $20 billion segment and, for most of our brand’s 25-year history, we’ve been abdicating it to the competition.”

That changed in 2012, as Kappitt explains, “We decided that we’ve been missing a massive opportunity and that it was time for us to claim our fair share.” The reason the chain decided to open for lunch in August of that year was “purely mathematical,” he says.

The majority of the chain’s 769 U.S. locations now serve lunch on Saturdays and Sundays, and about 25 percent, mostly those located in downtown urban areas, serve lunch seven days.

In at least 85 percent of the restaurants, Outback’s lunch menu features numerous options priced under $10, including popular Lunch Combos, priced at $7.99, that include soup or salad plus an entrée such as the Classic Cheeseburger, six coconut shrimp, or one-half of a filet focaccia sandwich. A 6-ounce Steak Plate served with fries is available at $9.99, and lunch guests can order from the Aussie-Tizers, Signature Steaks, and Outback Favorites just as they would from the dinner menu. The sandwiches and salads are the top sellers at lunch, but Kappitt says he was surprised by the high number of steaks the chain sells at lunch.

While one of Outback’s distinctive features has always been its laid-back, Aussie-inspired culture, that changes with lunch service because, as Kappitt explains, business customers require a different pace of service so they can have their meal and get back to the office in time.

“That’s one of the main reasons our lunch menu focuses on sandwiches, salads, and burgers—items that are quicker and easier to get out than steaks,” he notes. “Guests can have a leisurely lunch if they want to or they can eat and get back to work.”

Outback has taken a multi-faceted approach to marketing its new lunch menu. For weekend lunches that are available chain-wide, the company uses national media outreach. Restaurants that also serve weekday lunches display banners in their windows, post exterior signs, use direct mail, and leverage social media outlets such as Yelp, Facebook, and Twitter. Until recently, Kappitt says, social media were handled on a national basis, but now they are handled locally by those units serving lunch all seven days.

So far, Outback’s mathematical analysis has proved accurate: “As far as lunch sales go, we’re happy with what we’re seeing,” Kappitt concludes.

Neither The Palm nor Outback believes the afternoon offerings are in any way cannibalizing their dinner business. As Bozzi explains, the attractively priced, multi-course lunch menu provides a good opportunity to demonstrate The Palm’s variety to people who might not have visited the restaurant at dinner.