The 411 Behind the News
Three hot topics have hit the news recently, but what’s the real story with Friday’s wanting franchisees, consumers wanting healthier options and how traffic is still flat.
1. Get Healthier
A new report from consultancy Technomic, Inc., "Better-for-You Chains: Consumer Ratings of Restaurants' Health Offerings," shows that a majority of consumers are unsatisfied with restaurant chain's availability of healthy options. A majority of those surveyed said it's important for all restaurants to offer healthy options.
"Consumers may not select healthy options on every occasion," Technomic exec vice president Darren Tristano said in a news release. "But increasingly, operators must understand the importance of health to their customers, and many will need to refresh their menu offerings to deliver what their customers demand."
Of course, what “healthy” means is in the mind of the consumer. For instance, consumers increasingly rate Whataburger and Bonefish Grill as very good on the availability of healthy options year over year. For Whataburger, improved ratings may result from the 550 Calorie Menu it introduced in 2012, said Technomic, while Bonefish Grill's increase may be driven by consumers increasingly associating its fresh seafood offerings with health.
At full-service restaurants, more than half of visitors to the Cheesecake Factory, Bonefish Grill and Bahama Breeze Island Grille say these chains are very good when it comes to providing healthy options. While Millennials' top choice on this attribute is Bonefish Grill, Baby Boomers award the highest ratings to The Cheesecake Factory.
With the growth of small chains like Arizona-based True Food and Kitchen (heading toward Chicago), and NYC-based vegan café Blossom du Jour, now at a modest four units, the signs are clear that contemporary consumers now consider healthy options important.
2. Thank God It’s What?
TGI Fridays is planning to sell off the bulk of its company-owned restaurants, becoming the latest chain looking to get out of the risky business of operating restaurants itself.
The casual dining chain said recently it plans to sell 247 U.S. restaurants to franchisees, which reduces their expenses and exposure to elements beyond their control.
“It mitigates the risk for the restaurant company,” Steve West, a restaurant analyst with ITG told Fortune magazine. Typically a restaurant company gets a 5% cut of overall sales from a franchisee, but is spared from bearing capital expenses, and the day-to-day complexity of running a restaurant, including dealing with labor issues. The company also is less exposed to ups and down in sales, West said.
According to Fortune, Fridays has been gearing up for the shift by remodeling restaurants and updating its menu to stay relevant. The overhaul is also aimed at attracting prospective franchisees, more likely to be attracted to restaurant where traffic and sales are on the rise. So far, 93 restaurants have been remodeled.
The first TGI Fridays, which opened in 1965 in New York City, is credited with starting or popularizing any number of major restaurant trends - single bars, giant Strawberry Daiquiris, Bloody Mary brunches, mid-century advertising memorabilia as decor, among others - and spawned a slew of imitators, including those created by Friday’s originator Alan Stillman. There are now more than 900 restaurants with reported system wide sales of $2.7 billion.
3. Steady as she goes
While visits were flat for the restaurant industry overall from April through June, the marketing clout of major and small restaurant chains was enough to keep total consumer visits from dipping during the April through June quarter. That’s better news than independent restaurants, which saw a decline in consumer visits of two percent for the quarter, reports foodservice researcher The NPD Group.
Visits to major chains remained flat compared to same quarter a year ago while small chain traffic increased.
Chains outperformed independents over the short- and long-term the past five years, reports NPD's CREST research, which tracks daily how consumers use restaurants and foodservice outlets. Major chains currently represent 64 percent of total industry traffic, small chains represent 11 percent and independents represent 25 percent of foodservice visits versus 28 percent in 2010.