Sarah E Lockyer

Recipe for success

Editor's Letter

Growth — it’s something the restaurant industry can’t seem to live with or live without. 

Speedy growth has often led to a boom-and-bust cycle for many chains; slow growth often leads to impatience on Wall Street or with other shareholders. 

The notion of expansion has always been exciting for restaurateurs. Starbucks’ chairman, president and chief executive Howard Schultz grew that brand from four stores in Seattle to nearly 19,000 coffeehouses around the world. Subway was once a lone sandwich shop in Connecticut, but today the company boasts 39,387 restaurants in 102 countries. 

Beyond the behemoths, brands like Smashburger have grown from one unit to 209 locations in just five years. Richard Schaden, chairman of Consumer Capital Partners, the owner of Smashburger, recently told me that today’s restaurant growth story is about differentiation, finding consumer segments on the upswing and taking your time to get it right. He plans to use that formula with two additional CCP growth brands: Live Basil Pizza and Tom’s Urban 24.

There are many ways to find capital for growth — build an investor network, launch a franchising push, acquire concepts, sell equity, or latch on to the coattails of a large parent company. 

In our feature story Nation’s Restaurant News West Coast bureau chief Lisa Jennings takes a detailed look at one of the industry’s hottest growth segments — fast-casual pizza [4]. As Lisa outlines, roughly two dozen concepts already have surfaced with plans to take build-your-own  single-serving pies to new markets nationwide. And they’re looking at various ways to garner the needed capital and operating structure to expand.

Of course, the biggest ingredient in a restaurant brand’s successful growth is a menu that attracts customers. Today, the restaurant industry is seeing increased consumer interest in items that are fresh, made to order, sourced locally and/or sustainably and have a health halo. That demand is driving the need for a new perspective toward a restaurant’s management of its supply chain. 

For example, burger specialist Krystal stepped out of its beef-and-chicken wheelhouse with its Pork Chop Krystal limited-time offering — an item that surely forced the chain to source a new supply and evaluate new SKUs. 

This increasingly important consumer trend led NRN managing editor Paul Frumkin to explore the various pieces to the puzzle — not just the sourcing, but the marketing and pricing of these products once developed. The in-depth piece [5] highlights efforts not only from Krystal, but Applebee’s, IHOP and Qdoba Mexican Grill, as well.

And finally, growing a restaurant brand can only happen when profitability exists, and improving margins today is more important than ever. NRN associate editor Erin Dostal takes a look at that side of the equation with an exploration of what the industry has been chasing for years: value pricing [6]. Rather than simply using a dollar menu to drive traffic, new pricing strategies are looking to target certain items with certain pricing even at certain times of the day in order to maximize not only customer numbers, but also per-guest profit. 

With capital secured, menu items that meet consumer demand and price points that grow margins, a restaurant brand has its best chance of success.    

Contact Sarah E. Lockyer at [email protected] [7].
Follow her on Twitter: @slockyerNRN [8].