TribLIVE

| Business


 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Trendier fare takes bite out of casual dining

By The Orlando Sentinel
Saturday, March 9, 2013, 12:01 a.m.
 

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

Most-Read Business Headlines

  1. Pittsburgh Brewing tries to reconnect with region, return to glory days
  2. Hiring in shale industry shifts to engineering, construction workers
  3. EPA hearings to bring coal debate to Pittsburgh streets
  4. Hotels, restaurants lead job additions in Pittsburgh region
  5. Consol Energy posts $25 million loss despite gas gains
  6. Construction of $500M power plant in South Huntingdon stalled
  7. Central Blood Bank parent in merger talks with Florida system
  8. Stocks end with little change as investors await Fed moves, jobs report
  9. Dollar Tree set to spend $8.5B on Family Dollar
  10. Plug-in Accord makes gas station visits rare
  11. FAA proposes $12M safety fine against Southwest
Subscribe today! Click here for our subscription offers.