After a painful year of industry contraction during the COVID-19 pandemic, restaurant operators are looking to grow.
Restaurant brands in all segments are driving sales and restaurant counts with aggressive expansion pushes and operational enhancements that touch every part of the restaurant — from the kitchen, to the dining room to the drive-thru.
Nation’s Restaurant News talked with executives from Focus Brands, P.F. Chang’s, Dog Haus, Dave’s Hot Chicken and Rush Bowls, all of whom will be presenting at the inaugural CREATE: The Future of Foodservice event next month, about five key strategies driving post-pandemic restaurant growth.
Ghost kitchens and virtual brands
Ghost kitchens and virtual brands had already been gaining traction in the industry before the pandemic forced operators to look for new ways to drive off-premises revenues, and many feel these delivery-only concepts will continue to drive growth.
Pasadena, Calif.-based Dog Haus, for example, has enjoyed an unexpected bounty during the past year and a half from the rousing success of Absolute Brands, a collection of six virtual concepts it created in-house using existing Dog Haus menu items and designed to capture third-party delivery sales. Although they were originally designed to operate out of commercial kitchens, the concepts proved successful as what André Vener, left, founding partner at Dog Haus, called “host kitchen” concepts operating from existing Dog Haus restaurants.
“I think it has legs,” said Vener of the potential for the future of virtual brands. “We feel that some of these brands will be brick-and-mortar at some point.”
Innovative restaurant formats
Damola Adamolekun, left, CEO of P.F. Chang’s, also sees strong potential in the future of off-premises dining. The Scottsdale, Ariz.-based casual dining chain is planning to add as many as 15 to 25 P.F. Chang’s To Go locations next year, on top of the 15 it expects to have by then end of 2021, he said.
“The smaller format will operate in smaller spaces and enable us to reach more customers,” he said.
While company’s flagship “bistro” dine-in format measures about 6,500 square feet to 7,000 square feet, the To Go concept, focused on takeout and delivery, operates in less than a third of that space, with a footprint between 1,500 square feet and 2,000 square feet.
The company sees the smaller concept as a component of its strategy to execute at an equally high level no matter how its customers choose to order, Adamolekun said.
“Off-premises is important, but No. 1 is driving sales in our restaurants,” he said.
Accelerated drive-thru improvements
Restaurant companies that had well-established drive-thru operations before the pandemic tended to fare well amid the indoor dining restrictions of 2020, and many see this mode of order fulfillment as a growth opportunity for the future.
Focus Brands, parent of the McAlister’s Deli, Carvel, Jamba, Schlotzsky’s, Moe’s Southwest Grill, Cinnabon and Auntie Anne’s concepts, is ramping up its drive-thru capabilities, said Joe Guith, left, president of restaurant brands at the Atlanta-based company.
“McAlister’s has been on that journey for a couple of years,” he said, adding that work is underway at other concepts, including Moe’s, to enhance their drive-thru capabilities.
Co-location strategies, in which different brands share the same real estate but keep their operations separate, are another potential growth opportunity the company is pursuing, he said.
Auntie Anne’s and Jamba, for example, have recently opened a co-branded drive-thru location, although Guith noted that co-branding has potential only for certain locations and brand pairings.
Menus for a changing consumer
Andrew Pudalov, left, founder and CEO of Boulder, Colo.-based Rush Bowls, said he saw a need for a concept that offered clean, healthy meals in a small format that caters to young consumers’ on-the-go lifestyles.
His company’s concept, which focuses on acai and other fruit and vegetable bowls, along with smoothies, has been growing rapidly and has its sights set on nationwide expansion in both nontraditional venues such as food courts and airports, as well as in residential neighborhoods.
“We want to be that go-to healthy place within the community,” Pudalov said.
The company’s efficient business model, which features a small footprint and minimal labor, has been ideally suited for the pandemic and continues to hold potential for future growth, he said.
In addition, product expansion and menu innovation will continue to drive growth, as the company continues to test ingredients such as new spices and introduce new products such as Rush Bites, which are peanut butter balls with honey, oats and chocolate chips, rolled in coconut.
Opportunities for franchising
Pudalov also sees growth opportunities in franchising for the Rush Bowl concept, after proving the model for the past 17 years.
“We are growing really rapidly, from both existing partners and new franchisees,” he said, citing the company’s staff of veteran store operators as one of the main drivers of its success as a franchisor.
“We really understand the challenges, and what works and why,” Pudalov said.
Likewise, Dave’s Hot Chicken also views franchising as a successful business model for future growth, said Bill Phelps, left, CEO of the 20-unit chain. The company has sold the rights to about 400 units that are slated to open over the next five years.
Phelps said the company was surprised at its success in selling franchises during the pandemic, relying mainly on video calls to close the deals, and he attributes that at least in part to the fact that the spicy chicken sandwich concept is in strong demand.
“It just kind of hits on all cylinders,” he said. “We don’t even have to advertise — word of mouth is so powerful that we are getting calls from operators of all kinds of other concepts looking for someone new to grow with.”