Trendier fare takes bite out of casual dining
Casual dining is in the throes of a midlife crisis.
A quarter-century ago, consumers feasted on fried appetizers, unlimited breadsticks and big desserts at Applebee's, Olive Garden and Chili's. Today many Americans are trading those restaurants in for cheaper, faster fare or splurging a bit for a trendier experience.
Midpriced, sit-down restaurants — known as casual dining in the industry — have seen on average about 2 percent fewer customer visits each year since 2008. That translates into a total drop of almost 600 million annual visits, to 6.4 billion in 2012.
“They've been around quite a while, and many of them have not stayed as relevant in meeting consumers' wants and needs of today,” said Bonnie Riggs, a restaurant analyst with research firm NPD Group.
The world's largest casual-dining company, Orlando-based Darden Restaurants, has been hit especially hard. Company executives cut sales and earnings expectations last month, acknowledging to analysts that their major brands, such as Olive Garden and Red Lobster, have suffered because they've been too slow responding to major shifts in how Americans eat out.
“It is clear to us that given our current business situation, we are indeed in a new era,” CEO Clarence Otis told analysts.
Other companies have experienced similar turbulence. This month Applebee's and IHOP owner DineEquity reported declining traffic at both brands for its fourth quarter, while Chili's parent Brinker International toned down its profit forecast.
“We know casual dining is not the bright, shining star that it used to be,” Brinker CEO Wyman Roberts said.
Tony Roma's has dwindled from 157 U.S. restaurants to 40 during the past decade, though the company says it's still opening eateries.
The industry is trying to reinvent itself with lower-priced meals that are quicker and more healthful.
Darden, for example, said last week that it plans to speed up Olive Garden's lunch service, jump on culinary trends faster, attract younger diners with more technology and lure back lower-income customers with good deals.
The economy has played a major role in slowing sales. American budgets are taking one hit after another — most recently from higher payroll taxes and rising gasoline prices.
Americans cut their dining-out budgets dramatically during the economic downturn from which many in the middle class have not fully recovered.
“Many consumers have had to adjust to having less and spending less,” stated a recent report from NPD Group, noting that nearly 75 percent now consider their spending cautious. So when they eat out, they often find cheaper alternatives.
“It's a lot of money” to dine out at Red Lobster or Romano's Macaroni Grill, said Jhonatan Arias, 26, of Altamonte Springs, Fla. “If you have the money to sit down and splurge, then we go to a place like that.”
Arias and his girlfriend usually eat dinner at home, and he often grabs fast food for lunch. He recently took a noontime break at Tijuana Flats, one of the “fast-casual” chains that have gobbled up customers at a steady pace.
Visits to those restaurants, which include brands such as Chipotle, rose by 8 percent last year compared with 2011, according to NPD Group.
Fast-casual restaurants sell fare that's a step up from fast food. Customers still order and pay at the counter, making meals quicker and cheaper than at sit-downs.
“It's quick. It's easy. It's less expensive,” said Fraley Sadlo of College Park, Fla., who frequents Tijuana Flats and Einstein Bros. Bagels with her two young sons.
Applebee's is borrowing a page from the competition's playbook, testing a lunchtime express service in its hometown of Kansas City. Customers can order and pay at kiosks, so they don't have to wait for servers to bring checks when they're done.
If that test is successful, analyst Mark Kalinowski of Janney Capital Markets expects Darden and other companies to mimic it.
The more-established chains are getting squeezed by lower-end competitors, but newer, “polished casual” restaurants also pose a threat. They are a tad more expensive but have more sophisticated food, decor and drinks.
Places such as the Cheesecake Factory appeal to younger, more affluent diners who “want something new, contemporary, more social and more exciting,” said Darren Tristano, executive vice president of research company Technomic.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Highmark seeks double-digit increase for more benefits, heavy use
- Consumer, core prices inch up
- FedEx investing another $1.2B in growth projects at FedEx Ground in Moon
- Air-bag deaths draw scrutiny of Congress as recalls widen
- SEC approves looser mortgage lending guidelines
- Natrona Bottling Co. keeps soda pop operation focused on craft, taste
- Chevron puts $20M into educating, training Appalachian workers
- Amid struggles, top fiscal executive to leave EDMC
- Large-scale batteries are integral in shift to renewable energy
- Calgon Carbon poised for explosive growth
- High pollution levels found near Ohio gas wells