Slowed overall growth spurs casual chains to test new initiatives

Slowed overall growth spurs casual chains to test new initiatives

The 35 casual-dining chains in the 2008 Second 100 saw their aggregate annual systemwide-sales growth rate virtually cut in half in their latest full fiscal years, to 2.81 percent from 5.59 percent, but many are already nostalgic for such results in the face of same-store performance that is slowing further.

Even the latest-year statistical standouts of the Second 100’s casual-dining group, including BJ’s Restaurants Inc. [3] of Huntington Beach, Calif., are being challenged.

For its first quarter, ended in April, 74-unit BJ’s said its comparable-store sales were “approximately flat,” thereby ending 45 consecutive quarters of same-store improvements. That compares to a more than 6-percent boost in full-year same-store sales for all of 2007. BJ’s management said a 5.5-percent increase in menu prices in the first quarter was “essentially offset” by reduced guest traffic at comparable stores.

CASUAL-DINING CHAINS RANKED BY U.S. SYSTEMWIDE SALES*Actual results, estimates or projectionsSource: NRN research
     U.S. SYSTEMWIDE FOODSERVICE SALES*(BY FISCAL YEAR, IN MILLIONS)
LATEST-YEAR RANKPREC.-YEAR RANKCHAINFISCAL YEAR-ENDLATESTPRECEDINGPRIOR
12On the Border Mex. Grill & CantinaJune ’08$434.0$418.0$400.0
23Famous Dave’sDec. ’07430.0372.6320.0
35Mimi’s CafeDec. ’07411.0370.0321.0
410Bonefish GrillDec. ’07390.0327.0235.0
51Lone Star Steakhouse & SaloonDec. ’07387.0449.0479.0
67Maggiano’s Little ItalyJune ’08377.0351.0329.0
76Joe’s Crab ShackDec. ’07365.0360.0460.0
84Johnny Carino’s Ital./Carino’s Ital. GrillJune ’08361.1372.0382.0
98FuddruckersSept. ’07342.0340.0370.4
1013Morton’s, The Steakhouse Dec. ’07327.0297.0268.0
1123BJ’s Rest. & Bwry/Brewhse/Pizza & GrillDec. ’07318.7241.5181.0
1212Ninety Nine Restaurant & Pub Dec. ’07311.3311.9282.2
1311Marie Callender’s Rest. & BakeryDec. ’07304.0315.0322.0
1415Claim JumperDec. ’07294.0274.0252.0
1518McCormick & Schmick’sDec. ’07290.0260.0235.0
1617Dave & Buster’sJan. ’08283.1269.0225.0
1714Chevys Fresh MexDec. ’07272.7288.6280.3
1816Houston’sDec. ’07264.0271.9260.0
1920Houlihan’sSept. ’07260.3251.7217.8
2024Benihana of Tokyo March ’08247.0233.0227.0
2119Buca di BeppoDec. ’07245.6253.8249.5
2221Champps AmericanaJune ’08240.0245.0262.0
2325Max & Erma’sOct. ’07235.0231.0228.0
2421Black Angus SteakhouseDec. ’07230.0245.0255.0
2526Rainforest CafeDec. ’07226.5228.5224.0
2629 The Capital GrilleDec. ’07225.0204.2165.2
2728El ToritoDec. ’07221.4214.7198.9
2832 Fleming’s Prime Stkhse & Wine Bar Dec. ’07221.0188.0150.0
2927Bertucci’s Brick Oven Pizzeria Dec. ’07219.2218.8204.8
3031Old ChicagoDec. ’07217.1192.1179.6
3130Legal Sea FoodsDec. ’07215.0202.0190.0
3233Beef ‘O’ Brady’s Family Sports Pub Dec. ’07202.9181.0142.2
338Smokey Bones Barbeque & Grill May ’08200.0340.0337.0
3434Hard Rock CafeDec. ’07187.3180.0172.0
3535Elephant Bar RestaurantDec. ’07182.0168.0149.0
  TOTALS: $9,937.2$9,665.3$9,153.9
CASUAL-DINING CHAINS RANKED BY GROWTH IN U.S. SYSTEMWIDE SALES(Year-to-year percentage change) *Actual results, estimates or projectionsSource: NRN research
LATEST-YEAR RANKPREC.-YEAR RANKCHAINFISCAL YEAR-ENDLATEST* VS. PRECEDINGPRECEDING VS. PRIOR
12BJ’s Rest. & Brewery/Brewhse/Pizza & GrillDec. ’0731.9733.43
21Bonefish GrillDec. ’0719.2739.15
34Fleming’s Prime Steakhouse & Wine BarDec. ’0717.5525.33
47Famous Dave’sDec. ’0715.4116.44
516Old ChicagoDec. ’0713.016.96
63Beef ‘O’ Brady’s Family Sports PubDec. ’0712.1027.29
712McCormick & Schmick’sDec. ’0711.5410.64
89Mimi’s CafeDec. ’0711.0815.26
95The Capital GrilleDec. ’0710.1923.61
1011Morton’s, The SteakhouseDec. ’0710.1010.82
1110Elephant Bar RestaurantDec. ’078.3312.75
1218Maggiano’s Little ItalyJune ’087.416.69
1314Claim JumperDec. ’077.308.73
1419Legal Sea FoodsDec. ’076.446.32
1524Benihana of TokyoMarch ’086.012.64
166Dave & Buster’sJan. ’085.2419.56
1720Hard Rock CafeDec. ’074.064.65
1822On the Border Mex. Grill & CantinaJune ’083.834.50
198Houlihan’sSept. ’073.4215.56
2015El ToritoDec. ’073.127.94
2127Max & Erma’sOct. ’071.731.32
2235Joe’s Crab ShackDec. ’071.39-21.74
2334FuddruckersSept. ’070.59-8.19
2417Bertucci’s Brick Oven PizzeriaDec. ’070.186.84
2513Ninety Nine Restaurant & PubDec. ’07-0.1910.52
2625Rainforest CafeDec. ’07-0.882.01
2733Champps AmericanaJune ’08-2.04-6.49
2821Houston’sDec. ’07-2.894.57
2930Johnny Carino’s Italian/Carino’s Italian GrillJune ’08-2.93-2.62
3026Buca di BeppoDec. ’07-3.231.72
3129Marie Callender’s Restaurant & BakeryDec. ’07-3.49-2.17
3223Chevys Fresh MexDec. ’07-5.51 2.96
3331Black Angus SteakhouseDec. ’07-6.12-3.92
3432Lone Star Steakhouse & SaloonDec. ’07-13.81-6.26
3528Smokey Bones Barbeque & GrillMay ’08-41.180.89
  AVERAGE: 3.697.93

BJ’s is not alone in its current quest to stabilize guest traffic counts and maintain or build average annual sales per restaurant, but it actually may be better off than many of its rivals in the Second 100, who saw business go south during their last full fiscal years. The average rate of growth for estimated sales per unit among the 35 casual-dining chains in the Second 100 fell by 0.22 percent in the latest year, compared with the preceding year’s average growth rate of 1.82 percent.

The experience of the Beverly Hills, Calif.-based Houston’s chain underscores the challenge faced by the Second 100’s casual-dining specialists. Houston’s is considered by many to be one of the gold standards by which full-service chain operations might be judged. Yet for the its fiscal year ended in December, owner Hillstone Restaurant Group, for the first time in onlookers’ recent memory, posted a drop in Houston’s U.S. systemwide sales. They fell 2.89 percent to $264.0 million, versus year-earlier results. Houston’s closed one branch last year and converted another to a different Hillstone concept, giving the flagship brand 30 locations at the end of 2007.

CASUAL-DINING CHAINS RANKED BY NUMBER OF U.S. UNITS*Actual results, estimates or projectionsSource: NRN research
    YEAR-END NUMBER OF UNITS*
LATEST-YEAR RANKPREC.-YEAR RANKCHAINFISCAL YEAR-ENDLATESTPRECEDINGPRIOR
13Beef ‘O’ Brady’s Family Sports PubDec. ’07239213183
21FuddruckersSept. ’07230226257
32Lone Star Steakhouse & SaloonDec. ’07195223253
45On the Border Mexican Grill & CantinaJune ’08165158144
56Famous Dave’sDec. ’07164145126
64Johnny Carino’s Ital./Carino’s Italian GrillJune ’08159162173
79Bonefish GrillDec. ’0714011990
87Marie Callender’s Restaurant & BakeryDec. ’07134137139
910Mimi’s CafeDec. ’07132115102
108Joe’s Crab ShackDec. ’07120120149
1111Ninety Nine Restaurant & PubDec. ’07115114109
1213Max & Erma’sOct. ’0710399102
1312Chevys Fresh MexDec. ’0797102101
1417Old ChicagoDec. ’07958780
1515Bertucci’s Brick Oven PizzeriaDec. ’07929292
1515Houlihan’sSept. ’07929289
1714Buca di BeppoDec. ’07909393
1818Black Angus SteakhouseDec. ’07828488
1919El ToritoDec. ’07797876
2020Smokey Bones Barbeque & GrillMay ’087373126
2122Morton’s, The SteakhouseDec. ’07726864
2221Benihana of TokyoMarch ’08706969
2324BJ’s Rest. & Brewery/Brewhse/Pizza & GrillDec. ’07695645
2425McCormick & Schmick’sDec. ’07655449
2523Champps AmericanaJune ’08606163
2626Fleming’s Prime Steakhouse & Wine BarDec. ’07544539
2726Dave & Buster’sJan. ’08474542
2831Claim JumperDec. ’07444036
2829Elephant Bar RestaurantDec. ’07444135
3028Hard Rock CafeDec. ’07434344
3129Maggiano’s Little ItalyJune ’08424137
3232Legal Sea FoodsDec. ’07363432
3334The Capital GrilleDec. ’07322623
3433Houston’sDec. ’07303232
3534Rainforest CafeDec. ’07262627
  TOTALS: 3,3303,2133,209
CASUAL-DINING CHAINS RANKED BY GROWTH IN NUMBER OF U.S. UNITS(Year-to-year percentage change) *Actual results, estimates or projectionsSource: NRN research
LATEST-YEAR RANKPREC.-YEAR RANKCHAINFISCAL YEAR-ENDLATEST* VS. PRECEDINGPRECEDING VS. PRIOR
12BJ’s Rest. & Brewery/Brewhouse/Pizza & GrillDec. ’0723.2124.44
27The Capital GrilleDec. ’0723.0813.04
311McCormick & Schmick’sDec. ’0720.3710.20
45Fleming’s Prime Steakhouse & Wine BarDec. ’0720.0015.38
51Bonefish GrillDec. ’0717.6532.22
68Mimi’s CafeDec. ’0714.7812.75
76Famous Dave’sDec. ’0713.1015.08
84Beef ‘O’ Brady’s Family Sports PubDec. ’0712.2116.39
99Claim JumperDec. ’0710.0011.11
1013Old ChicagoDec. ’079.208.75
113Elephant Bar RestaurantDec. ’077.3217.14
1215Legal Sea FoodsDec. ’075.886.25
1215Morton’s, The SteakhouseDec. ’075.886.25
1414Dave & Buster’sJan. ’084.447.14
1512On the Border Mexican Grill & CantinaJune ’084.439.72
1627Max & Erma’sOct. ’074.04-2.94
1710Maggiano’s Little ItalyJune ’082.4410.81
1833FuddruckersSept. ’071.77-12.06
1921Benihana of TokyoMarch ’081.450.00
2019El ToritoDec. ’071.282.63
2117Ninety Nine Restaurant & PubDec. ’070.884.59
2221Bertucci’s Brick Oven PizzeriaDec. ’070.000.00
2226Hard Rock CafeDec. ’070.00-2.27
2218Houlihan’sSept. ’070.003.37
2234Joe’s Crab ShackDec. ’070.00-19.46
2229Rainforest CafeDec. ’070.00-3.70
2235Smokey Bones Barbeque & GrillMay ’080.00-42.06
2828Champps AmericanaJune ’08-1.64-3.17
2931Johnny Carino’s Italian/Carino’s Italian GrillJune ’08-1.85-6.36
3025Marie Callender’s Restaurant & BakeryDec. ’07-2.19-1.44
3130Black Angus SteakhouseDec. ’07-2.38-4.55
3221Buca di BeppoDec. ’07-3.230.00
3320Chevys Fresh MexDec. ’07-4.900.99
3421Houston’sDec. ’07-6.250.00
3532Lone Star Steakhouse & SaloonDec. ’07-12.56-11.86
  AVERAGE: 4.813.38

Closures or conversions are not unprecedented within the Houston’s organization, but the chain’s inability last year to leverage its smaller unit base with improved store-level performance is what stands out. It’s not as if Houston’s didn’t try: Its already impressive estimated average annual sales per unit rose 0.24 percent to $8.52 million.

Many chains have little time to fret about the recent past. Several foodservice stock analysts, researchers and pundits in recent months have gauged year-over-year monthly declines in casual-dining guest traffic—at some chains for a second consecutive year.

Shrewd operators are not waiting around for guests to appear.

“While no one can accurately predict how the consumer will continue to react in this volatile and slowing economy, we do not believe that the current difficult operating environment is likely to abate in the near future,” BJ’s Restaurants’ chief financial officer, Greg Levin, said earlier this year. “We are accelerating our planned schedule of 2008 sales-building initiatives,” including “online ordering and curbside cashiering services, call-ahead seating service, expanded delivery service, new lunch specials, and additional print media support for our new menu entrées and other services.”

“We’re absolutely feeling the effects of the economy, but holding our own,” said Rachel Phillips [4]-Luther, director of national marketing for the 61-unit Champps Americana sports bar chain, based in Littleton, Colo.

Champps last fall was acquired from publicly traded Champps Entertainment Inc. by F&H Acquisition Corp., which also owns the Fox & Hound Restaurant Group [5] of Wichita, Kan.

Phillips-Luther said the new owners are getting to know the Champps concept as well as its business situation, and as a result the chain is “doing small tests, nothing too crazy” of possible new menu, service or marketing programs to be “ready for 2009.”

Champps recently opened two franchised units in converted buildings, a first for the organization, and is preparing to open a “baby Champps,” or much-smaller unit in the Detroit airport to complement a popular but significantly larger unit in the Dallas-Fort Worth airport’s international terminal.

“It comes down to economics and what makes sense” and “whether we can deliver the Champps experience,” Phillips-Luther said of how management is weighing options such as conversions, nontraditional locations and smaller footprints in today’s business climate.

Several of the Second 100’s 35 casual-dining chains are sharpening the focus on their guest loyalty programs or overall value pitch.

Dave & Buster’s has heavily promoted its dining-pool hall-game arcade operations in recent months through an “Eat and Play Combo” deal offering discounted game credits when guests buy certain entrées. The Dallas-based chain also is offering $10 in free arcade game play to anyone who registers for the Dave & Buster’s Rewards program, through which members receive exclusive e-mail discount offers and the ability to reach “gold” status through significant game play that results in ongoing gaming discounts.

Like some competitors, Second 100 newcomer Elephant Bar Restaurant of La Mirada, Calif., uses food to promote the value of its chain’s full-service experience to diners who are shell-shocked by exploding energy costs and grocery store bills. The 48-unit chain promotes “20 entrées under $10,” including Fresh MisoYaki Fire-Grilled Salmon, Blackened Catfish with Langostinos and Shrimp Jambalaya, and Wok-Fried Coconut Chicken Curry; multicourse kids’ meals for $2.95; and, at times, discounted happy-hour food specials.

Second 100 chains see slowed sales growth for second consecutive year [6]