After years of lopsided sales and diners reluctant to spend their diminished discretionary incomes eating out, in 2013 full-service brands climbed confidently out of the hole left by the economic recession. What they found when they emerged, however, is that diners' tastes have changed, leaving once-dominant chains in the dust.
Casual-dining sales are in decline across the board, with only a handful of brands in that segment posting sales gains in the last year. As younger diners opt for trendy fast-casual eateries, casual chains are scrambling to reinvent their brands, updating menus, store designs, and even tableware to stay relevant. Many are installing tabletop tablets, pushing online ordering, and placing a greater emphasis on takeout. Some are even venturing into the fast-casual world themselves.
Gaining volumes of visitors are beer-centric brands and sports bars, such as Yard House and Buffalo Wild Wings, as well as upscale-casual chains like The Capital Grille and Fleming's. Family dining is also experiencing a resurgence, led by IHOP and Waffle House, as breakfast surfaces as a desirable meal to eat out.
Last year, FSR debuted its first FSR 50 with a list of the top 10 restaurants in five different segments. This year, we took a different direction by providing a run-down of the top 50 brands in the full-service industry by 2013 sales revenue. For every publicly traded company, we pulled numbers from SEC filings and made estimates, where necessary. For restaurants that don't make their sales public, we relied on data partner Technomic. The list strives to reflect 2013 calendar revenues, but not every public restaurant company closes its fiscal year at the end of December; in those cases, as indicated on the chart, we reported sales for the fiscal year that included the most months in 2013.
$4.51 Billion It has been a tumultuous year already for Applebee's, despite the fact that it leads the FSR 50 by more than $720 million in sales. Applebee's same-restaurant sales slipped for the third consecutive quarter in May, prompting Julia A. Stewart, CEO of parent company DineEquity, to tell investors, "We are hitting the reset button at Applebee's."
It's not the first time DineEquity has reached for that button in recent years. Applebee's has struggled to differentiate itself from its direct competitors, including Chili's and TGI Fridays, who offer similar limited-time promotions and to-go programs. As sales slipped in the late 2000s, Applebee's began its menu innovation; since December 2007, 90 percent of the menu has been upgraded or changed, and the brand's strategy to regain relevance will rely on similar strategies.
As part of the reset, Applebee's wants to grow sales in each daypart, specifically lunch and late night, and have frequent new menu rollouts. It will place an intense focus on an 18-month pipeline of new and tested menu items—likely with an amplified emphasis on healthier fare—and DineEquity hopes by year-end, the domestic systemwide remodel will be complete. "We need to distinguish and differentiate ourselves in a meaningful way so we're not just like everybody else," Stewart told investors in February.
In 2013, Applebee's partnered with ESPN to sponsor the sports network's "Monday Night Countdown" program, an effort to brand itself as the place to watch football games on Monday night. Inside restaurants, the campaign coincided with a section called the "ESPN Fan Zone" and a co-branded commercial spot. The brand announced in May that it was testing a customer-loyalty program in 160 locations. It also plans to install tablets at every table in its restaurants by the end of the year—as do Chili's and Buffalo Wild Wings.
Chili's Grill & Bar
$3.8 Billion Sales and unit count slipped slightly from 2012 to 2013 at Chili's. Several company-owned locations were remodeled last year, and the initiative has continued this year. The new contemporary design coincides with the rollout of improved kitchen equipment, dubbed the "Kitchen of the Future" by the brand, one of the largest investments in Chili's history. With the updated store design and kitchen, Chili's plans to evolve its menu and anticipates the changes will provide a positive long-term impact on sales.
Another key update was the implementation of point-of-sale and back-office software designed to increase efficiency and track trends. In fiscal 2013, the brand reported the point-of-sale technologies had maximized server productivity and helped deliver greater margins. This year, Chili's is planning 11–12 openings and wants to accelerate its to-go business. Ziosk tablets also arrived on tables in the first half of 2014, enabling guests to place orders, play games, and pay at the table.
$3.62 Billion It has been a big year for the No. 3 casual-dining chain, even if future plans for the brand subtly suggest it is out of touch with consumer expectations. Sales dipped more than 4 percent in fiscal 2014, but Olive Garden became the focus for parent company Darden after sister brand Red Lobster was sold in May, and sweeping changes are ahead to bring Olive Garden up to speed with the design, technology, and operations that its competitors implemented years ago. A new logo now spells the name of the restaurant in a swirly cursive font and replaces the purple grapes on the former logo with a green plant bauble. A new lunch and dinner menu are on the way with items such as Crab Topped Chicken and the Caprese Topper (a salad). Olive Garden is testing modern interiors that include sleek wood floors in the lobby, track lighting, lengthy green couches, and dark wood accents in the dining rooms to replace the antiquated orange Italian hues. By mid-2015, Olive Garden plans to renovate 75 locations to the new prototype, followed by 125–150 annually for the next two years. The purpose of the refresh is to bring older, outdated restaurants—some 350 units built before the rollout of the Tuscan farmhouse prototype in 2000—up to date.
Other adjustments include ditching the green-trimmed plates and possibly replacing them with white plates; testing car-side pick-up, which rivals Applebee's and Chili's have done for years; and the implementation of online ordering, a long-awaited effort that launched in April and should roll out nationwide by the third quarter of 2014. The goal of the upgrades, according to Darden, is to create "a nicer place than the price suggests."
$2.83 Billion IHOP has been on a tear, racking up its fourth consecutive quarter of positive same-store sales in May, when it notched a 3.9 percent sales increase. The brand benefits from its positioning as a family-dining destination, as consumers show a renewed interest in breakfast—and eating it regardless of what time of day it is. IHOP launched its newly designed menu in June 2013, after extensive testing to ensure guests could navigate the offerings and order easier. The chain, which offers more than 14 varieties of pancakes, plans to print three versions of the menu throughout the year, as it introduces new items and refines its offerings.
International development has also been a boon for IHOP, which had 56 global locations at the end of December, and has signed on for many more this year, including units in Guam and Bahrain. In terms of non-traditional locations, IHOP expanded its fast-casual foray IHOP Express into Atlanta's airport in 2013, and this year is in the test phase for a new design prototype of the express model.
$2.46 Billion In 2013, Outback grew sales $63 million, or 2.6 percent, and grew its AUV despite closing three units.Outback rode the coattails of its remodeling program, which launched in 2009 and has since refreshed 490 restaurants, including 84 in 2013, and was aided by strong limited-time offers such as a four-course meal deal for $15. In May, Outback introduced a limited-time Moonshine BBQ menu, proving its ability to stay on-trend with consumer tastes and committed to its LTO business plan.
Another stronghold for Outback has been its ability to appeal to—and retain—budget-conscious consumers. "The original concept of Outback was value-oriented, and that really drove our sales, so our goal was to have entry-level price points in every category to make our brand more approachable," Outback president Jeff Smith told FSR last year. In addition, Outback has introduced healthy items with fewer than 600 calories and is seeing strong traction with its weekend lunch offerings.
$2.36 Billion The largest full-service seafood restaurant in the U.S., Red Lobster was sold in May to Golden Gate Capital. This followed months of turmoil among Darden's investors about how to spin off—or, ultimately, eject—the brand, following revenue losses. Same-stores sales dipped 9 percent in the three quarters leading up to the sale, and Darden statistics indicate Red Lobster's new restaurants have not been creating value, even after prototype optimization, as the average weekly guest count of 3,281 at new units was nearly 500 lower than anticipated. The average capital investment of the five Red Lobster units built in 2013, meanwhile, was $4.2 million, or more than $100,000 above that of former sibling Olive Garden.
Golden Gate hasn't revealed yet what its plans are for Red Lobster, though one of its managing partners said in a statement after the purchase that the private equity firm sees "significant opportunities for future growth." To truly grow Red Lobster, Golden Gate will need to re-evaluate the demographic Red Lobster appeals to—something Darden struggled with for the last seven years as its other brands flourished—and tame the volatility that has defined Red Lobster's quarterly same-restaurant sales.
$2.34 Billion 2013 was the third consecutive year of positive same-store sales for Denny's. The brand completed 174 remodels last year, converting old stores to its new Heritage prototype, a necessity given that most of its restaurants are more than 20 years old. Denny's has adopted a seven-year remodel cycle, meaning about 70 percent of its stores will be due a remodel over the next five years.
The brand has also focused heavily on international development, closing 2013 with 101 units outside the U.S, and celebrating its 25th anniversary in Puerto Rico this year.
It opened its first non-traditional military base restaurant in November, located at Nellis Air Force Base in Las Vegas—a city that is also the site of the brand's highest-volume restaurant in the system.
Denny's partnered with National Geographic earlier this year to unveil its Adventure Menu for kids, and also launched a partnership with video game producer Atari in July.
$2.1 Billion Cracker Barrel enjoyed a 2.2 percent sales bump last year as it focused on business priorities that included investing in technology and equipment to support operations and reduce costs. Additionally, the company is building on its "Handcrafted by Cracker Barrel" ad campaign, which calls for refreshing menu categories to provide healthier options. To appeal to younger guests, Cracker Barrel has also leveraged its music program and digital marketing campaigns, such as its sponsorship of country singer Brad Paisley's tour.
This year, Cracker Barrel added Wholesome Fixin's to its core menu in the first quarter, after testing the category of 600-calorie-and-under menu items last year. It also will roll out licensed food products in grocery stores and open up to seven new locations. From February through April, Cracker Barrel's traffic was down 2.9 percent, but the average check rose 2.6 percent.
The Cheesecake Factory
$1.69 Billion Last year represented the fourth straight year of positive comparable same-store sales—little surprise for the chain with the highest average unit volume on the FSR 50. The brand entered three new markets in 2013: Knoxville, Tennessee; Novi, Michigan; and San Juan, Puerto Rico. The Michigan and Puerto Rico locations set opening-week record sales.
The Cheesecake Factory has had a good start to 2014, landing on Fortune magazine's list of 100 Best Companies to Work For, and the company is also creating a team to focus on sustainability. The Cheesecake Factory expects to open 10–12 locations this year, compared to seven last year.
$1.62 Billion TGI Fridays is undergoing a complete makeover. Like other brands in the casual-dining space, Fridays found it was slightly out of touch with today's consumer, so this summer, it launched a food truck tour, revamped its décor, and came out with a new menu. The food truck tour, dubbed the Summer of Fridays, made stops at multiple summer music festivals and sports events. The purpose of TGI Fridays' efforts is to rebrand the restaurants as a local, corner bar, rather than a dated chain. This sentiment spurred a $10, all-you-can-eat appetizers promotion this summer, all in an attempt to bring in customers. This is the challenge facing Sentinel Capital Partners and TriArtisan Capital Partners, the private equity firms that bought Fridays for an estimated $800 million in May.
$1.41 Billion Sales grew 12.6 percent for Texas Roadhouse, which opened 32 units in fiscal 2013, and is planning to open another 25–35 this year. Alcoholic beverages accounted for about 11 percent of restaurant sales in 2013, and the company encourages its managing partners at local Texas Roadhouse restaurants to tailor their beer selection to match regional and local tastes. In December, Texas Roadhouse was voted one of the nation's Top 50 Best Places to Work in a survey conducted by career-search website Glassdoor; it was the only casual-dining chain to make the list.
Texas Roadhouse does not rely on national advertising to promote itself, but instead uses earned media, an e-mail loyalty program, and marketing coordinators at the restaurant and market level to develop and execute local marketing strategies. The brand also encourages managing partners to participate in creative community-based marketing, such as hosting local radio or television programs.
$1.38 Billion Growth is bullish at LongHorn, which opened 44 locations in 2013, increased sales 12.4 percent year over year, and is projected to cut the ribbon on 37–40 more units this year. Its swiftly rising unit count and healthy sales make it the fastest-growing Darden brand by a long shot (its closest competitor in the family is Olive Garden, with a projected 15 openings this year). LongHorn's average capital investment in new locations is $3.4 million, compared with $4.1 million for competitor Texas Roadhouse.
Locations in 38 states aren't enough for Darden, which is also pushing the development of LongHorn in international territories that include Malaysia, Puerto Rico, and Brazil. Darden believes the ultimate potential for LongHorn is 700 restaurants in the U.S., versus the latest tally of 464 in May.
$1.28 Billion After Ruby Tuesday founder Sandy Beall stepped down as CEO and president in 2012, JJ Buettgen stepped up to the plate. Fiscal 2013 was his first year helming the 40-year-old brand, and given that sales had dipped 4.6 percent between 2011 and 2012, he instituted quite a few changes last year, finding that the menu, dining experience, and brand marketing were out of touch with consumer expectations.
Last August, Ruby Tuesday introduced the first wave of new menu items from its revitalized R&D process, debuting flatbreads and a beer-battered green beans appetizer. Menu rollouts have continued in 2014, and the drink menu has shifted away from wine and toward on-trend beverages such as craft beers and premium cocktails. Finally, the brand introduced a transformed music mix in its restaurants to elevate diners' moods. The changes in Ruby Tuesday's environment coalesce in a new, balanced marketing program that relies less on print, digital, and local marketing—though digital and local marketing have been focal points of the industry in the past five years—and accentuates TV ads at expense levels that are more in line with its competitors.
Buffalo Wild Wings
$1.17 Billion With a laudable 23.2 percent sales growth over 2012—the highest in the FSR 50—Buffalo Wild Wings shows little sign of taming its wild progress. The brand has nearly 1,000 units in the U.S. and believes it has the potential to hit 1,700 locations in North America, using a half-and-half mix of company-owned and franchised units. In May, it celebrated a multi-level, 15,000-square-foot restaurant opening in Times Square.
BWW benefits from several factors in the 2014 dining environment: increased hype in the sports bar and wings segments; a slew of beers available on tap and in bottles; and a lower cost of doing business, thanks to a 10.6 percent decrease in the cost of chicken wings in 2013, while its full-service competitors must contend with rising beef prices.
So far this year, BWW has partnered with NTN Buzztime to bring tabletop tablets to all restaurants by the end of 2015. It also announced plans to introduce online ordering in an effort to add momentum to its take-out business, which accounted for 14 percent of 2013 sales.
$1.0 Billion In 2013, Red Robin opened 22 company-owned restaurants, including one unit of its fast-casual prototype, Red Robin's Burger Works. It also remodeled 19 units, bringing the total units remodeled over the last two years to 32. Expect to see 50 more locations remodeled this year, along with 20 company-owned openings of the full-service brand.
Other upgrades in 2013 included a new menu format, new plating and food presentation, and a different media plan. While previous media was built around Red Robin's limited-time offerings, the campaign "A Million Reasons" shifts to a broader strategy that encourages choosing Red Robin for more occasions overall.
Burgers represent 46 percent of total food sales, but Red Robin has done an admirable job defining itself outside of burgers and bringing attention to its beverage program, introducing can-crafted beer cocktails last summer and wine milkshakes this spring. To further differentiate itself, Red Robin also upgraded to an interactive allergen menu in May.
$981 Million A sales growth of 0.8 percent might sound meager, but for Bob Evans Restaurants, fiscal 2013 was strong, considering how many days its stores were closed. Bob Evans tallied 1,300 closed days across its portfolio while it remodeled 195 locations with the Farm Fresh Refresh redesign, which encompasses a brighter color scheme, new bakery display, dedicated carry-out area, gift card displays, redesigned retail space, and a mural depicting the heritage of the brand. But the effort has clearly paid off: Farm Fresh Refresh restaurants experienced sales increases of approximately 3.7 percent compared with non-redesigned restaurants, which recorded a scant same-store sales increase of 0.1 percent.
With its focus on remodeling, Bob Evans did not open any new restaurants, but in 2014, the company plans to complete its refresh project and open four locations. To promote new openings and remodeled units, Bob Evans increases advertising in the market area. It spent approximately $33 million on restaurant advertising and marketing last year, and with nearly 350 restaurants to remodel in fiscal 2014, that number is expected to grow significantly.
$951 Million Waffle House posted a 1.4 percent gain in sales last year and added 33 stores, bringing its total unit count to 1,700. While other brands crank out redesigns, updated menus, and technological improvements, Waffle House is perfectly content to serve up Southern-style breakfast and hash browns in its signature yellow-and-black units, a cultural icon in the South. Waffle House's sign hasn't been updated in 40 years, and its laminated menus represent a throwback to 1950s diners across America, when the brand was established—a sentiment that has clearly worked to drive sales in the 25 states where the brand operates.
P.F. Chang's China Bistro
$896 Million While sales dipped 3.2 percent last year, P.F. Chang's remains the top full-service Asian concept in the U.S., and the future is optimistic, as Millennials gravitate toward Asian flavors. The China Bistro has kept up its strategy of unveiling seasonal menus and limited-time promotions, but may need to rethink how it is appealing to its consumers. Recent moves suggest it is doing just that: In April, the chain announced it was partnering with DataSource, a managed services provider, which will provide P.F. Chang's with supply chain management services, training materials, multi-channel marketing support, and menu management technology.
$828 Million Last year Hooter's turned 30, unveiled a sleek updated logo, rolled out a late-night menu, selected a new advertising agency (Skiver), launched the "Step Into Awesome" campaign, and created a new store prototype. The new design has high exposed ceilings, painted ductwork, and cypress wood walls to present a brighter space. The bar has been given a central location in the restaurant and updated with swiveled bar stools, new booth seating, and high-back chairs at all tables.
2014 holds a lot of promise for Hooters, as well. It is continuing the rollout of the prototype to more locations and expanding into new international territories that include Thailand, Brazil, Japan, and China. Earlier this year, Hooters launched its HootClub mobile app and customer loyalty program, which allows the brand to learn the average age and menu preferences of customers and use that data to customize promotions.
$775 Million Guest traffic slowed at BJ's in the latter half of 2012, and the trend continued into 2013. Leaders, including Greg Trojan, who joined as CEO and president in February 2013, spent last year developing the next phase of BJ's strategy to reinvigorate restaurant sales. Focus areas include food quality and innovation, affordability, and branding.
BJ's launched a new menu at the end of last year that coincided with the debut of its new brand positioning, which emphasized value, atmosphere, menu variety, and food and beverage under the tagline "One For All." It also saw continued adoption of its Mobile Pay technology that allows guests to pay from the table using their smartphones.
BJ's has one of the highest AUVs ($5.3 million) among the casual-dining chains. Executives believe the brand, which has 146 locations in 17 states, is still a growth concept with a largely untapped domestic opportunity.
In June, the brand launched an app that allows customers to place orders for dine-in ahead of time and find their meals ready to be served when they arrive at the restaurant. The move is expected to increase efficiency at the restaurants, which can have one-hour waits on weekend evenings.
Carraba's Italian Grill
$710 Million Carraba's renovated 41 locations in 2013 to refresh the restaurants with a more contemporary Italian theme. The average remodel cost of $385,000 per restaurant is about $140,000 more than sister restaurant Outback's remodel cost per restaurant, despite the fact that the average Outback makes $232,000 more than the average Carraba's. Regardless of the costs, Carraba's plans to remodel 30–40 locations in 2014 and is also eyeing expansion beyond the South and East, narrowing in on what the brand considers the top 100 U.S. markets.
Carraba's will continue to use limited-time offers to attract diners, as they provide attractive margins for the restaurant, compelling price points for its guests, and helped the brand achieve a respectable sales bump of 1.9 percent. The Pasta Seconds promotion introduced in 2013, which offered customers the option of a second bowl of pasta, hit the mark with customers and Carraba's profitability objectives.
California Pizza Kitchen
$689 Million Golden Gate Capital acquired California Pizza Kitchen for $470 million in 2011, and its 2013 sales revenue of $689 million—a 4.2 percent bump over 2012 numbers—is proving CPK to be a good investment. One of only two pizza full-service restaurants on the FSR 50, CPK has managed to stay relevant with dedicated seasonal menu rollouts and contests such as "Best Pizza Chef," in which finalists compete to cook a CPK signature pie as well as one of their own, and "Slice of the Prize," a sweepstakes that rewards every diner.
This year, CPK began rollout of its "Next Chapter" menu and a remodel, beginning at its Market Square location in Sacramento, California. New menu items include upscale entrées such as the Fire-Grilled Ribeye and Hearth-Roasted Halibut, lunch duos, and seasonally inspired creations such as Harvest Kale Salad. The updated beverage menu includes on-trend handcrafted cocktails, and the redesign uses communal tables and an upscale, relaxed aesthetic.
$647 Million While Logan's Roadhouse increased sales a respectable 2.8 percent in 2013, it limited expansion in 2014, promising to open fewer than five locations this year, as it focuses on improving existing restaurants and regaining market share. In February 2013, Mike Andres was appointed president, CEO, and chairman of the board for the Nashville, Tennessee–based concept, and he's outlined a wealth of changes for the 23-year-old company, beginning with an increased emphasis on value.
On tap for the brand are updated wine, beer, and liquor offerings as Logan's improves its bar operations. The company also plans to employ a better marketing mix and new brand campaign, the result of hiring a large digital agency to execute Logan's marketing strategy, and reevaluate the restaurant's design prototype.
Dave & Buster's
$636 Million An entertainment-based restaurant built around an arcade concept, Dave & Buster's pulled in $636 million in revenue in 2013, 49 percent of which came from restaurant sales with 34 percent food and 15 percent beverage. It differentiates itself with a games and entertainment zone inside each venue where customers can play arcade games before and after eating. This means the company's competition is not as much about other restaurants as it is movie theaters, bowling alleys, night clubs, and even Six Flags and SeaWorld.
Dave & Buster's likes to introduce summer menus, and this year it partnered with Maker's Mark bourbon to create a Smokehouse BBQ Burger and Maker's Mark Wings, offerings that are in line with current dining trends of liquor-tossed food.
Perkins Restaurant & Bakery
$628 Million The all-day-breakfast restaurant saw a 2.6 percent dip in sales—surprising considering that breakfast is a growth sector this year. In 2013, the company, which employs approximately 25,000 people, announced franchise development plans in Iowa and Nebraska, and debuted a Great Plates value menu, with prices from $4–$8, to appeal to economically minded guests. Offerings included a Chipotle Jack Burger and Grown-Up Grilled Cheese.
Perkins also launched a remodeling initiative last year, with the new prototype defined by an entry arch on the exterior and a big bakery showcase inside.
$573 Million In 2013, Bonefish Grill opened two locations in California, its first in that state, and unit growth is the top domestic priority for the seafood brand in 2014. Parent company Bloomin' Brands plans to open at least 15 new restaurants in the redesigned prototype, which has clean, modern lines on the exterior and earthy tones inside. While the majority of Bonefish Grill locations are in the southern and eastern U.S., much like its sister brand Carraba's, company leaders believe it has the potential to expand into what they have identified as the top 100 U.S. markets.
The ambition is to hit 300 locations in the next four to six years, an increase of about 100 units. In 2014, the brand has updated its brunch menu and was also named among the most allergy-friendly restaurant chains in the U.S. by Allergy Eats.
Cheddar's Casual Café
$541 Million Based in Texas, with 130 locations in 23 states, Cheddar's differentiates itself from its casual-dining competitors with an aesthetic that boasts copper awnings, gas lamps, reclaimed old-Chicago brick, granite countertops, and a 300-gallon aquarium. Cheddar's says its neighborhood feel is an experience that comes "at a price that is significantly below competitors," with most entrées priced under $10.
Last spring, Cheddar's launched a Lighter Side menu that features five entrées with fewer than 575 calories each, as well as a seasonal menu that includes an Asian salad with mango, a Jalapeño Burger, and a Mushroom Swiss Cheeseburger. The inspiration for the burgers came from Cheddar's e-club members, who posted responses to the question, "What does a great burger mean to you?"
$503 Million O'Charley's sales dipped 1 percent as the casual-dining chain continued its series of $9.99 meal promotions and limited-time promotions such as Free Pie Wednesday. It did not add any new locations in 2013, according to Technomic, perhaps retooling its growth strategy to focus instead on growing sales and developing guest loyalty, as many other casual-dining competitors are doing.
$495 Million Even a modest 0.2 percent sales growth is a positive sign for the hickory-smoked barbecue brand. In 2014, Famous Dave's is focusing on growing top-line revenue, as well as improving unit performance with a smaller footprint, which will lower the costs to construct and operate each unit and should yield higher sales per square foot. Two openings in fiscal 2013 reflected the new prototype, which has a more prominent bar presence—in line with the goal to create a better beverage-alcohol mix.
Off-premise revenues have emerged as another focal point for Famous Dave's. Last year, the brand began supporting dine-in, to-go, and catering with its marketing efforts. As part of those initiatives, Famous Dave's hired a senior director of marketing, a director of catering marketing, and a senior manager of to-go marketing, planning to boost its top-of-mind relevance beyond in-house restaurant visits. The company also implemented a customer relationship management tool to market its catering services and improve the catering process, and the company set up a call center for its to-go program.
Joe's Crab Shack
$448 Million Last year, Joe's Crab Shack polished off six straight years of positive comparable-restaurant sales, buoyed by 6.9 percent growth over 2012. One way the brand makes positive returns is through successful openings in resurgent markets, such as Harlem, New York, and Newark, New Jersey.
The cheap real estate in markets seeking to rebound ends up a durable investment, according to president Jim Mazany. "We like the opportunity of going into markets where we can be on the leading edge of recovery," he told FSR last year. "It's so far proved to be a strong strategy for us."
Another real estate strategy that Joe's employs with great success is, ironically, the complete opposite: targeting areas with a high population density or regional and national tourist attractions. Destination markets, as Joe's calls them, as well as regions with a propensity for seafood have proved most lucrative and most loyal to Joe's. The company targets AUVs of $3.9 million in new restaurants, although its system-wide 2013 AUV was $3.2 million, a notch ahead of competitor Bonefish Grill, which hit $3.1 million AUV.
$407 Million Friendly's filed for Chapter 11 bankruptcy in 2011, as rising costs caused the company to step away from its core values. CEO John Maguire told FSR's sister magazine, QSR, in June that around that time, the company stopped investing in people, did not fix problems in stores, and cut both the quality and portion sizes of its food. Since emerging from Chapter 11 in January 2012, the brand has reinvested in higher-quality offerings such as fried fish, a new training program for employees, and a marketing campaign.
Last year, in an effort to boost its culinary efforts and prompt consumer feedback, Friendly's engaged data collection service On The Spot Systems to drive its internal menu testing and R&D initiatives. The service has helped ensure the Friendly's menu, which re-launched in January 2013, is in tune with market demands.
$395 Million Acquired by Darden in 2012, Yard House resonates with the current up-tempo culture surrounding craft beers and the "more taps the better" hype. Alcohol represented 39.2 percent of sales at Yard House in 2013, and the chain projects seven to eight new locations in fiscal 2014. Its culture is further enhanced by the Tap Room, a blog that invites guests to join the conversation and build a connection with the Yard House community by checking out photos and news related to the brand. With a healthy 6.7 percent growth, Yard House has shown it can handle more locations.
On the Border
$390 Million On the Border has changed hands multiple times in the last four years. In 2010, Brinker International sold On the Border to Golden Gate Capital. Then, in June, private investment firm Argonne Capital Group acquired the Mexican-themed chain.
Despite the internal turmoil, On the Border has made strides developing its menu to better suit consumer needs. It rolled out weekend brunch in April with wallet-friendly $2 Mimosas and $3 Bloody Marys. It also upgraded its Border Smart menu of lighter options, introducing lower-calorie versions of its Grilled Chicken Fajitas and Tomatillo Chicken Enchiladas. The brand has also made strides in the technology department, upgrading its waitlist management platform to handle guest flow.
Maggiano's Little Italy
$388 Million Maggiano's attributes much of its 2 percent growth over the last year to its Classic Pastas, so popular that 40 percent of guests order one of the dishes. The company is also making changes to reduce costs in 2014, and is trying to attract guests beyond special occasions.
In addition to its signature wine collection, the company rolled out a Handcrafted Classic Cocktails menu last year with nine cocktails that include favorites like the Manhattan and more off-beat selections such as the Dark'N Stormy. The brand plans to open six to eight locations in 2014, and its growth strategy involves a smaller prototype with a more strategically sized kitchen and, notably, no banquet spaces. The goal with the smaller design is to create a lower-investment model and also find real estate more easily.
The Capital Grille
$363 Million Boasting a check average of $70–$72.50 per person, The Capital Grille pulled in an AUV of $7.1 million at its 49 restaurants in the fiscal year that ended in May. The brand projects four or five new openings this year, versus three new units in fiscal 2013, and the growth is expected to focus on major metropolitan cities, which The Capital Grille likes to target.
In terms of operations, The Capital Grille has stuck with what works: its wine list of more than 350 selections, private dining rooms, and personalized service have carried the brand and its slow-but-steady expansion. The menus and wine lists in each region vary slightly to reflect geographic differences in guest preference, price, and selection.
$331 Million As Americans re-dedicate themselves to breakfast, Village Inn's sales should be heating up. Although the breakfast heritage brand had fairly stable AUV and unit numbers in 2013, revenues dipped 9 percent year over year. Still, it was better than the 14.9 percent decline from 2011 to 2012, perhaps an indication the company is taking its unit-level economics seriously as the casual-dining sector sees a shift in consumer expectations.
Ruth's Chris Steak House
$323 Million Ruth's Chris attributes its 5.3 percent increase in comparable-store sales to traffic growth. Its focus on a dining experience that appeals to a wide range of occasions, from celebrations to business meals, is boosting the brand's universal appeal, as well. Growing at a slow and steady pace both domestically and internationally, the upscale chain projects four openings this year in the U.S. and has 18 international locations open, with more in the works.
Ruth's Chris does well with specials and prix-fixe offerings, such as a wine pairing dinner in June that was timed with Father's Day and Ruth's Classics, its popular three-course prix-fixe meal. Despite the rosy sales glow, the brand is contending with commodity constraints: Beef costs at Ruth's Chris have risen 14 percent in the last two years, and with 2014's record meat prices, those costs continue to impact the bottom line.
Miller's Ale House
$296 Million Florida-based Miller's Ale House has benefitted from a renewed public interest in sports bars and ale houses. Its sales grew 10 percent compared to 2012 numbers, while it expanded with six new locations. Miller's has become a popular place for locals to watch sports, whether it's a game on Sunday or an NBA draft lottery party. The bar-focused concept has even provided inspiration for up-and-coming full-service brands such as Mexican gastropub Who Song & Larry's.
Pappadeaux Seafood Kitchen
$286 Million With only 33 locations, Pappadeaux Seafood Kitchen has the fewest units of any restaurant on the FSR 50, even fewer than the high-end steakhouse and fine-dining concepts. Its AUV of $8.7 million is second only to the Cheesecake Factory's (not including Dave & Buster's, where half of the volume comes from the arcade section). Two-thirds of Pappadeaux's locations are in Texas, where the brand maintains a stronghold in the Dallas-Fort Worth and Houston markets.
Pappadeaux's strong reputation extends far beyond the Lone Star State, with visitors and newcomers alike eager to try the establishment. "I'm looking forward to eating at Pappadeaux," Xavier Su'a-Filo, an NFL rookie, told reporters in May after he was drafted by the Houston Texans.
Hard Rock Café
$283 Million Hard Rock Café has enjoyed steady growth with U.S. penetration just under 50 locations—likely a strategic move to avoid over-saturation and target the limited markets that have high tourism traffic. Its strong AUV of more than $6 million supports that real estate strategy.
The brand hosts multiple musical promotions during the year, and last year, it launched an Artist of the Month program that provides established and emerging musicians a platform to share music videos on the restaurant's in-café video system. In April, the restaurant encouraged guests to take the stage and sing their favorite songs to receive a free meal on Tax Day.
McCormick & Schmick's
$280 Million Revenues for seafood brand McCormick & Schmick's began slipping in 2008, from $391 million to nearly $50 million less by the time it was bought by Landry's in early 2012 for an estimated $131.6 million. The troubles began when the chain went public in 2004, and lost some of its brand culture and identity.
Since Landry's reeled in McCormick & Schmick's, the waters have remained quiet, and once-floundering sales are back up to the $280 million range. While not as strong as they once were, sales are actually comparable to upscale competitors Fleming's Prime Steakhouse, The Capital Grille, and Brio Tuscan Grille.
$274 Million Shoney's has fought a hard battle to reclaim its relevancy. Since David Davoudpour bought the company in 2007, fans and industry executives have waited for the chain to shine once more, but with sales slipping 14.2 percent in 2013, the turnaround is nowhere near complete.
Still, the reinvention of the brand has made some promising steps: take-out program Shoney's On The Go took off in 2012, and earlier this year, the brand began liquor service in a new prototype that debuted in Georgia in January. The plan is for Shoney's to compete head-on with the casual-dining chains that serve alcohol.
Ninety Nine Restaurants
$273 Million At some point, Ninety Nine Restaurants outgrew its name. With 105 locations in 2013 and $273 million in sales, this New England chain of family restaurants has successfully lived up to its motto, "a passion to serve." Ninety Nine refines its menu on an ongoing basis and serves more than 20 million customers per year. Employee turnover, at just 50 percent, is low for the industry, and about half of Ninety Nine's management staff started as hourly team members. Ninety Nine hosts trivia nights in its neighborhood locations and offers discounts such as Kids Eat Free to brand itself as a community restaurant.
Uno Chicago Grill
$269 Million Sales dipped 4.3 percent at Uno Chicago Grill, a bit of a surprise considering the brand has stayed atop of trends such as small plates (its small-plate menu rolled out in 2011), a broad selection of craft beers, which rollled out in 2010, and tabletop tablets, which it also deployed in 2010. However, when the 5 percent drop in unit count is taken into consideration, the slight drop in revenues is simply a reflection that unit performance was perhaps holding steady rather than increasing. Uno also stays relevant by hosting tap takeovers with beloved craft beer brands, such as Founders, and by interacting consistently on Facebook and Twitter.
$267 Million One of two Asian concepts on the FSR 50, Benihana is benefitting from the renewed interest in Asian tastes that's sweeping the U.S. The brand, celebrating its 50th birthday this year, announces new chef's specials each month—typically a meal for two—and capitalizes on its branding as an occasion destination, promoting itself as a contender for calendar holidays as well as family celebrations. It also promotes fans' Instagram photos on its Facebook page as a marketing ploy.
Fleming's Prime Steakhouse and Wine Bar
$265 Million Despite maintaining the same number of locations, Fleming's sales rose 5.3 percent over 2012. One major enhancement was the launch of WinePad, which helps guests navigate the restaurant's wine list on an iPad. Fleming's spent two years developing the app and tested it in 10 restaurants before launching it last May.
Going forward, the brand is focusing on fresh design elements, such as the innovative back bar and soft lounge area in its new Las Vegas Strip location, which opened in January. The second Fleming's in Las Vegas, it has a large wine room perpendicular to the back bar and private dining rooms.
Romano's Macaroni Grill
$259 Million Ready for those in-restaurant opera singers to make a comeback at Macaroni Grill? After Ignite Restaurant Group bought Romano's Macaroni Grill in April 2013 from Golden Gate Capital for $55.2 million, Ignite realized it needed to bring back the elements that made Macaroni Grill a destination in its heyday. That includes in-house opera singers and a revival of the house wine, as well as a tasting menu and braisers with slow-cooked meats served tableside.
For now, Ignite has slammed the brakes on new restaurant development at Macaroni Grill while it transforms the brand. When it does look to expansion, Macaroni Grill will leverage its franchise network, turning to both current franchisees and moneyed candidates. There are also plans to shift marketing from local TV efforts to national cable, which will expand marketing coverage from 61 percent of its restaurants to 100 percent.
$258 Million Johnny Carino's closed nearly 30 locations between 2012 and 2013, based on Technomic estimates, coinciding with a 10 percent decline in sales revenue. To counter the fading interest in casual-dining brands, the privately held company offers promotions such as half-price family platters and coupons for free appetizers. Many promotions receive input from fans via Carino's Facebook page, driving interest in the Italian eatery. Also performing strong for the brand is its chef's blog, where Executive Chef Chris Peitersen posts recipes and wine reviews.
Morton's The Steakhouse
$258 Million Unlike performance at most upscale steakhouses, sales were down slightly at Morton's in 2013, despite the addition of a new location. The average unit pulled in about $100,000 less than in 2012. Still, the brand is asserting its strengths, adding sports-themed promotions such as the ESPN "Lunch with a Legend" series, which brings sports figures like Chicago Bulls head coach Tom Thibodeau and celebrity servers that have included Arizona Cardinals wide receiver Larry Fitzgerald and Chicago Bears cornerback Charles Tillman.
Morton's will likely continue its prix-fixe menus throughout the year, such as the four-course summer menu it debuted in mid-May, and will continue marketing itself as a special-occasion destination. The brand also partnered with Brooklyn brewery Sixpoint at Morton's New York City location for a Brews and Bites event.
Brio Tuscan Grille
$251 Million Rounding out the FSR 50 is Brio Tuscan Grill, which had a quiet 2013, increasing sales a steady 3.5 percent thanks to six restaurant openings and sticking to its winning Italian chophouse formula. The average check at Brio was $25.05 last year, on par with 2012, and alcohol sales accounted for about 22 percent of restaurant sales, down just 1 percent from the year prior.
On average, restaurant openings of Brio require a net cash investment of $1.5–$2.5 million, which is quickly returned by the brand's strong $4.7 million average unit volume. The target audience for Brio is college-educated professionals, typically between the ages of 35 and 65. Brio offers a lighter menu of items with 550 calories or fewer and hosts a weekend Bellini Brunch, Martini Night Wednesdays, and daily happy hour. An open, exhibition-style kitchen lets guests watch chefs in action. Brio's corporate executive chefs develop new menu items in what the company calls a six-month "ideation" process.