Dinnerhouse chains fulfill demands for choices, takeout

Nation's Restaurant News, June 27, 2005 by Sarah E. Lockyer

Consumers--their tastes, income levels, lifestyles and dining choices--are the name of the game for dinnerhouse operators that rank in this year's Top 100. Operators that lead the casual-dining segment say changing consumer demographics, economic factors affecting guest spending and diners' increasingly sophisticated palates have sparked new menu offerings, varying price points and a growing emphasis on takeout service.

Foodservice operators who wish to address consumers' emerging concerns, lifestyle trends and eating habits must do so quickly in order to remain relevant in the overly crowded dinnerhouse space, according to foodservice marketing consultant Jim Matorin, president of Philadelphia-based Smarketing.

"We have become empowered consumers," he says. "The foodservice industry must offer convenience, healthful eating options, functional eating options, multicultural cuisine, a community feel and an experience."

The leading dinnerhouses are charging ahead to answer consumers' newest demands. Menu customization is just one way operators are providing customers with the ability to control their own dining experience.

In May T.G.I. Friday's, the 759-unit chain franchised by Minneapolis-based Carlson Restaurants Worldwide Inc., began offering a customizable Steakhouse Selects menu. The new menu section, which the company says is all about "quality and choice," offers four different cuts of steak with a choice from three optional flavored butters and one of five optional side dishes.

Greenwood Village, Colo.-based Red Robin Gourmet Burgers Inc., the operator and franchisor of the 265-unit Red Robin chain, debuted in April its on line "Burgerizer," which allows guests to customize its well-known and various burger offerings.

It was two years ago when Brinker International Inc. of Dallas began taking note of the customization trend, starting with the "Create Your Own Pasta" program at its 232-unit Romano's Macaroni Grill.

Last year Brinker's 133-unit On The Border introduced a permanent menu program called "Build Your Own Burrito," and Brinker's flagship brand, 1,051-unit Chili's Grill & Bar, offered this spring a limited-time "Build Your Own Big Mouth Burger" promotion.

At that time, Chris Barnes, a spokesman at Brinker, said, "Guests are becoming more adventurous, they want to sample new things and we need to provide new adventures in casual dining that keep [guests] coming back."

Bennigan's Grill & Tavern, owned by Metromedia Restaurant Group of Piano, Texas, introduced in April a redesigned menu that featured a new Mix & Match Entrees section, which allows guests to select their own combo meals built around the chain's grilled menu items.

Consumers not only are interested in choice when they dine out but also are interested in getting more bang for the buck, according to dinnerhouse operators.

"The guests are clearly saying they want value," says Dave Goebel, president of Applebee's International Inc., the operator and franchisor of 1,711 Applebee's Neighborhood Grill & Bar restaurants. "There is pressure on the pocketbook with high utilities, higher gas prices, mortgage payments rising, and they are saying, 'Give me value.'"

During this year's first quarter, when gas prices were near all-time highs, same-store restaurant sales at some dinnerhouse chains suffered. After seeing systemwide comparable sales in the 4-to 5-percent range during January and February, Applebee's, which is based in Overland Park, Kan., reported weaker same-store sales gains of about 2 percent in March and April.

Peter Oaks, a restaurant analyst at New York investment bank Piper Jaffray, said in a late April research note that Applebee's "core customer, who tends to sport a slightly lower average income than rival bar-and-grill formats, may be feeling pressures from higher energy prices and softer consumer confidence."

Goebel says the chain saw no decline in traffic counts but did see guests "managing their checks differently."

"They would go for an $8.99 entree instead of a $13.99 dinner," he explains.

Consumers' need for value sparked limited-time promotions at Applebee's and T.G.I. Friday's in late 2004 and early 2005. Both chains offered three-course, fixed-price menus to take advantage of consumers' value consciousness while providing expanded menu variety.

T.G.I. Friday's offered the Make It or Break It promotion that allowed guests to create a meal from four appetizers, 12 entrees and two desserts for $12.99. Applebee's offered three $10.99 combo meals called Three Course Combos, which included a choice of an Italian, a Cowboy or a Southwest-inspired meal and a choice from two desserts.

Both chains say the promotions were very successful.

In order to keep guests coming in the door, even during weak economic times, food innovation is the key driver, operators say.

"We're in the food business," says Larry Flax, California Pizza Kitchen Inc.'s co-president, chief executive and chairman, with Rick Rosenfield. "We try to introduce items that cause our customers to talk."