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2017 Second 100: Disruptors shake up Family-Dining segment

First Watch and Black Bear Diner take top spots

This is part of the Nation’s Restaurant News annual Second 100 report, a proprietary ranking of restaurant brands Nos. 101-200 by U.S. systemwide sales and other data. This report is a companion to the Top 100 report.

The Family-Dining segment is filled with legacy brands, but newer, fresher concepts are disrupting the group. Family Dining grew Second 100 systemwide sales to $2.6 billion in the Latest Year, from $2.5 billion the Preceding Year. 

Driving disruption is Sarasota-Fla.-based First Watch. The chain continued to rise in the ranks in terms of systemwide sales, with impressive 42.8-percent sales growth in the Latest Year. The breakfast-and-lunch chain again posted the top segment growth in Estimated Sales Per Unit, of 12.7-percent in the Latest Year.

The 33-year-old chain, which has 32 years of positive same-store sales, attributed its success largely to a focus on health, value and breakfast, as well as a commitment to innovation.  

“This segment is in need of innovation,” said Chris Tomasso, president of First Watch. “We have done a tremendous amount of innovation and evolution in the past few years. A lot of legacy concepts in this space have failed to adapt to the consumer’s needs.”

First Watch’s most recent customer experience evolution began with the launch of its 2014 “urban farm” brand positioning. It updating its restaurant interior design to a rustic style, complete with a mix of reclaimed wood and metals, and serving ware made of recycled materials. 

The chain also introduced a new menu with an “elevated approach” to breakfast. 

While First Watch has always been known for healthful options, Tomasso said in the last few years it has done more to make its menu relevant to consumers. It’s introduced healthful offerings, such as avocado toast, quinoa bowls and freshly made juices, like the Kale Tonic and Day Glow, and rolled out indulgent offerings such as Lemon Ricotta Pancakes.

“All of these things have resonated with the consumer,” Tomasso said.

Additionally, unit growth is enabling First Watch to bring the concept to more consumers. In the Latest Year, First Watch increased its unit base by 40.7 percent, to 197 locations, through the addition of 21 newly developed company and franchised locations and converting to the First Watch brand 18 Egg & I units and 19 Good Egg restaurants. Tomasso said the chain plans to continue to convert to the First Watch brand more Egg & I locations this year and next.

Another kind of Family-Dining brand growing hard and fast in the Latest Year is Redding, Calif.-based Black Bear Diner, which posted the segment’s second-highest systemwide sales growth, at nearly 14 percent in the Latest Year, as well as the second-highest unit growth, at 16.2 percent. 

 While much of the sales growth appears to be coming from unit expansion, the chain grew ESPU by half a percentage point. 

“Black Bear Diner is a strong performer with a unique positioning in the Family-Dining segment,” Bruce Dean, Black Bear Diner’s CEO, recently said in a statement.

The approximately 94-unit chain is differentiated by its lodge theme and an old-fashioned comfort food menu, with generous portions of meals like Bigfoot Chicken Fried Steak and Slow Cooked Pot Roast. 

Another differentiator for Black Bear — and a likely contributor to sales at the dinner daypart — is that unlike many of its Family-Dining competitors, it serves beer and wine. In 2014, the chain reported that sales were roughly split between breakfast, lunch and dinner, with about 35 percent of sales coming from the evening, a daypart many legacy Family-Dining chains have struggled to build.

Cincinnati-based Frisch’s Big Boy remained the largest Family-Dining concept in terms of systemwide sales, growing to $360.9 million in the Latest Year, an increase from $359.1 million in the Preceding Year. While closing five units, bringing its total unit count to 212 locations, the chain grew ESPU by a respectable 3.1 percent.

As First Watch and Black Bear Diner expanded, other top-performing Family-Dining chains have contracted. In the Latest Year, Friendly’s shrunk the most, decreasing units by more than 6.5 percent, followed by Huddle House, which saw its unit count fall by nearly 3 percent. 

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