This is part of the Nation’s Restaurant News annual Top 200 report, a proprietary ranking of the foodservice industry’s largest restaurant chains and parent companies.
The Family-Dining segment reported an estimated $15.9 billion in Latest-Year sales, led by legacy chains IHOP, Cracker Barrel Old Country Store and Denny’s. But smaller chains also made significant gains, particularly First Watch, Black Bear Diner and Huddle House, proving that there’s still room to grow in Family Dining.
Bradenton, Fla.-based First Watch led the Family-Dining segment in sales growth, with a 30.4-percent increase in sales compared with the Previous Year.
“Our brand is resonating greatly with the consumer right now,” Chris Tomasso, president of First Watch, said.
Earlier this month, First Watch promoted Tomasso to the additional role of CEO.
First Watch is poised to capitalize on three major consumer trends, according to Tomasso: the growth of the breakfast daypart, increased consumer interest in eating healthfully and overall value. For instance, breakfast and morning-snack traffic rose 1 percent in the year ended Feb. 18, 2018, according to The NPD Group, while lunch traffic was flat and dinner traffic fell 1 percent.
Freshly prepared food is also a hallmark of First Watch.
“Part of our core brand DNA is we don’t have heat lamps, deep fryers, microwaves,” Tomasso said.
And as a full-service chain, First Watch is competitive on value, with an average check of $12.50.
“Those three things are a sweet spot for us with the consumer,” Tomasso said.
Looking ahead, First Watch will continue to expand, especially after an investment in July 2017 from private-equity firm Advent International.
First Watch was among the leaders when it came to unit growth, with a 21.3-percent increase over the Previous Year. The chain has converted units of other brands it has acquired, such as Good Egg and Egg & I, and it plans to grow primarily with company units going forward. In May 2018, the company said it had more than 250 First Watch restaurants and 75 Egg & I restaurants.
The unit-growth leader in the Latest Year was Black Bear Diner, which reported a 23.3-percent increase, bringing it to 106 locations. The Redding, Calif.-based chain has been branching out beyond its home base in the Western U.S. to the Midwest and the Houston market with a hub-and-spoke approach.
Black Bear Diner also has had 27 quarters of same-store sales growth, according to CEO Bruce Dean. The chain has continued to grow despite headwinds against the segment.
“Traditionally, Family Dining has been the stepchild of the industry, but I’ve got a lot of faith in it,” Dean said. “We’re going to get an ever-expanding part of that market.”
Dean characterized Black Bear Diner as “an experiential brand” that serves solid food and delivers equal dayparts, while Family-Dining chains traditionally focus on breakfast and lunch.
“We believe there’s a lot of white space there with somebody that’s kind of doing something different,” he said.
Conversions have been the “bread and butter” of the brand’s growth, according to Dean. Now, after a private-equity investment from PWP Growth Equity in 2016 and a continuous build-out, Black Bear Diner’s growth is picking up steam.
“We can’t sit on our laurels, Dean said. “We’ve got to drive guest visits and be constantly putting our foot on the accelerator.”
Huddle House ranked first in Estimated Sales Per Unit growth, with a 5.4 percent increase in the Latest Year. President and CEO Michael Abt attributed the increase to same-store sales growth, closing underperforming units and opening restaurants that had significantly higher volumes than the chain’s systemwide average.
Same-store sales also rose at Atlanta-based Huddle House in the Latest Year by 2.5 percent. Abt said overall growth was driven by three factors: menu development, such as Sweet Cakes — Pancakes Perfected and a new and improved sandwich line; incremental media supported by outdoor and digital advertising that boosted transactions; and elevating the customer experience through improved service, cleanliness and food quality.
Read more:
2018 Top 200: Segment Trends
Contact Marcella Veneziale at [email protected]