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Improving same-store sales and customer traffic levels help drive the restaurant industry forward.
Deal valued at $374 million.
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Facing pressure from QSRs and other competitors, the family-dining segment continues to focus on its core competencies – namely breakfast and lunch – to meet consumers' needs.
In addition, sales in family dining's all-important breakfast daypart continue to face increased pressure as many quick-service restaurants turn to this area to boost their revenues. The close to 39,000 family-style restaurants in the United States recorded sales of more than $13 billion in 2009, a 2.7 percent decrease from the year prior, according to Chicago- based research firm Technomic.
"Family-dining restaurant operators have been struggling in this segment for a long time because they have not stayed relevant," adds Bonnie Riggs, restaurant industry analyst for the NPD Group, a research firm based in Port Washington, N.Y. "The heaviest restaurant traffic is from people between 25 and 34 years old, which is not the typical family-dining demographic."
Amidst this news, operators in this segment are seeking to reinvent themselves. For example, IHOP, a leader in family-style dining, launched the IHOP Café in Houston. This fast-casual concept focuses on seasonal and short-term menu offerings. IHOP's traditional outlets also have revamped menus, providing a wider variety of items that are lower in fat, calories and carbohydrates. The chain experienced 5.7 percent sales growth from 2008 to 2009, Technomic reports.
Family-dining icon Denny's tested a quick-serve spinoff Fresh Express on California State University's San Bernardino campus. In addition, drive-thrus were added to two franchised sites last year, according to Technomic.
As consumers keep close tabs on their spending and limit dinner dining, there continues to be a proliferation of value-oriented breakfast/lunch family-style operations. "Family-dining operations need to reinvent themselves. With increased competition, it is becoming more difficult to grow business in the morning-meal time slot," Riggs says.
Yet the breakfast segment offers the greatest potential for these operators. "Morning meals have accounted for 60 percent of restaurant industry growth," Riggs says. "As a result, there is a big opportunity for operators to capitalize on this daypart. Nearly 50 percent of the breakfast segment growth comes from those 50 to 64 years of age, typically a key target group for midtier operators [like family-dining restaurants]."
New independent concepts and updated chains with innovative menus will provide more visibility and increase sales potential in the family-dining segment.
Fox River Grove, Ill.
Among the many restaurants foregoing the dinner daypart that are popping up around the country, Brunch Café has created a unique niche.
One part traditional and one part gourmet, the breakfast/lunch menu at Brunch Café's northwest suburban Illinois locations in Fox River Grove, Roselle and McHenry appeals to a broader demographic than a typical family-dining restaurant.
"At our locations, we have families, businesspeople from surrounding office parks and kids from area schools. We also do a strong carryout business," says Peter Revel, Brunch Café's co-owner and manager. "Breakfast and lunch appeal to everyone, especially when there's a twist on it."
Unlike traditional family-dining restaurants that focus on comfort food, Brunch Café specializes in tweaking typical dishes and emphasizing the presentation of its food.
The difference is evident when customers first walk in the door. Three breakfast and three lunch specials are freshly plated and on display as well as described on a chalkboard nearby. "The first thing most customers do is walk over to check out the day's specials. There are some customers who have admitted they've never even opened our menu and only order what's on special," Revel says. "[Much of the appeal is because] we don't sacrifice the presentation just because we only offer breakfast and lunch."
Brunch Café also offers on- and off-site catering, which can extend into the evening hours. "We've catered weddings, in addition to bridal and baby showers, at our locations and off site," Revel says. "Catering is an important aspect of foodservice operations today, because the demand is there."
When Revel's brother-in-law Andy Zatos opened the café with his brother Ted in February 2008, they sought to fulfill a need for affordable dining in the area. The brothers knew the region and its demographic well, having owned Kojak's, a popular restaurant serving hot dogs and Italian beef sandwiches in nearby Cary, for the past 14 years. Revel, who has worked in the restaurant industry for two decades, came on board as partner.
All three locations are about 4,400 square feet. The Fox River Grove site seats 140. The 160-seat Roselle location opened in August 2009, and the McHenry site, which is the largest with 175 seats, opened for business last month.
One advantage to having limited hours is a happier staff. "More people like to work days rather than evenings, so we provide a prime shift," Revel says. Each location has about 30 employees.
Some may question the timing of opening a restaurant during the recession, but the Brunch Café has been able to capitalize on the down economy. "People know they won't have to spend as much for breakfast and lunch as they would for dinner," Revel says. "You can take a family of five out for breakfast and spend less than half of what dinner would cost."
Brunch Café's philosophy is that value doesn't have to compromise quality. "We keep everything consistent in terms of food purchasing. Even when items are out of season and cost more, we don't adjust our prices. Fortunately, business has been steady, and we haven't had to make any changes to compensate for the economy," Revel says.
The staff at Brunch Café spends a lot of time working the menu to ensure it remains relevant in the eyes of its customers. Popular specials are regularly rotated onto the menu. By the same token, dishes that are not selling well are quickly removed from the lineup. "When we first sat down to create the menu, we were looking to include different items that weren't available anywhere else," Revel says. "We did a lot of research and went through the necessary trial and error."
Andy Zatos is credited for the unique spin of Brunch Café's dishes. Best sellers include a stuffed waffle filled with strawberry cream cheese and fresh strawberries and topped with whipped cream and morestrawberries; breakfast sliders made with scrambled eggs, a sausage patty and cheese; portabella and asparagus benedict made with portabella mushroom caps, asparagus and two poached eggs; and the stuffed potato pancake, which is filled with scrambled egg, bacon and onion and topped with cheddar.
"We focus on fresh ingredients and like seasonal themes," Revel says. "Offering two dayparts instead of three gives us more flexibility with our menu."
Brunch Café's kitchen is void of the heavy-duty broilers, sauté stations and stoves that are prevalent in family-dining operations that offer dinner. Instead, the 2,200-square-foot kitchen contains a 24-foot line. All pancakes, crepes, French toast and potatoes are prepared on two 6-foot grills, which get the most use out of all the equipment in the back of the house. A six-burner stove and convection oven are also on the cook line.
Cold prep tables are part of the omelet station, sandwich station and prep line. These hold ingredients in six-pan containers.
Becoming a standout in the saturated family-dining segment is no small feat. By providing unique twists on traditional favorites, offering full-service catering and keeping tabs on customer preferences, Brunch Café has distinguished itself among its competitors.
Key Equipment for Family Dining
Energy efficiency: With refrigeration-unit doors frequently opened and closed during peak periods, it is important that this equipment is energy-efficient. This can help operators keep a handle on electricity costs.
Reliability: To maintain proper holding temperatures, family-dining operations rely heavily on equipment such as hot holding cabinets, steam tables and cold prep tables. It is vital that these units maintain proper temperatures consistently so as not to compromise food safety.
Utility requirements: Since a large number of family-style restaurants are being opened in pre-existing locations, it is important to make sure equipment's utility requirements can be accommodated by the site.