Eatertainment: The Next Frontier for Casual Dining

December 4, 2017
With Dave & Buster’s setting the bar, entertainment-driven concepts have continued to gain steam around the country.
By Gary M. Stern December 2017 Expansion

When two savvy entrepreneurs launched Dave and Buster’s, a 40,000-square-foot eatery in a Dallas warehouse in 1982, where diners could play games, they likely didn’t know it would result in a new restaurant concept: “eatertainment.” Eat your food, hoist a beer or two, and bowl, play ping-pong or darts in a separate space before or after a meal.

These eatertainments eateries appeal to a wide swath of customers: youngsters love it, 20-and-30-somethings gravitate to it, and their parents can relive their youth or take their families.

Now the eatertainment segment is exploding, attracting a bevy of competitors. Most are primed for expansion in 2018. Besides Dave & Buster’s, leading eatertainment rivals include: Main Event, Pinstripes, Punch Bowl Social, and Topgolf.

READ MORE: Why Punch Bowl Social is the next big eatertainment chain.

But will the heated competition lead to slimming down, where top performers prevail and bottom-feeders fall by the wayside?

The eatertainment chains that thrive will grow in a measured way, choose their locations carefully and capitalize on their niche.

When Dave & Buster’s debuted its gaming plus dining concept 35 years ago, “It was revolutionary; it was eatertainment for adults,” says Darren Tristano, a River Forest, Illinois-based foodservice consultant. Previously, the major form of entertainment plus dining was Chuck E. Cheese’s, which targeted kids.

Pinstripes
By offering gaming experience plus quality dining, Pinstripes is in the “sweet spot given the Amazon effect on traditional retailing.”

Eatertainment venues proved popular because they “caught on with young consumers, the millennials of their day. It had the gaming, the pool table, and the sports bar,” Tristano says.

Indeed millennials and GenXers are attracted to playing ping-pong, arcade games or bowling while waiting to eat or post-dining. “They’re exceptional multi-taskers so they can text, check social media, maintain a conversation, and play ping pong in between,” Tristano says.

Though casual dining chains Applebee’s and Ruby Tuesday’s have been struggling, eatertainment eateries are thriving because they “focus around being a destination and focus on the experience,” Tristano says. And most of these food-plus-gaming chains rely on a more upscale menu than their casual dining rivals, he points out.

In fact, menus at eatertainments appeal to millennials that prefer “grazing. They like to eat appetizers, rather than a main course. But he adds that “socializing is the driving force of these brands.”

The games may lure them in, but Tristano expects most eatertainment venues derive 75 to 80 percent of their revenue from food and beverage, and the remainder from fees for playing games.

Main Event
Main Event has 38 eateries that offer bowling, laser tag, billiards, interactive videos, and ropes adventure.

Because of the stepped-up competition in the eatertaimment space, growth has been slowing down, Tristano says. “Growth is coming from stealing chairs from existing businesses,” he says. He sees their revenue spiking by 3 percent a year, but “there aren’t enough new locations to go around.”

The eatertainment brands that will thrive are the ones that offer “value and frequency, whether it’s quality of food, or the bartender makes a great drink, or specializes in great value,” Tristano predicts. And the winners will attract steady customers who return once a week, not once a season.

Take Main Event, a fast-growing chain of 38 eateries with 16 located in Texas that offers bowling, laser tag, billiards, interactive videos, and ropes adventure. It’s opened 24 locations in the last three years and is slated for five new outlets in 2018.

Wayne Stancil, Main Event’s Plano, Texas-based vice president of operations, attributes its growth to the fact that “You can play games with family, friends or work friends, and let your hair down, because we bring everyone together under one roof in multiples venues.” Families are its target audience, and it attracts them via birthday parties, social media, community events and summer fun camps for kids.

Main Event “takes care of the veto vote. Someone might want seafood, steak or vegetarian, and we have something for everyone. Someone can bowl, play laser tag or billiards and we have great food and beverage,” he says.

Playing games when dining “moves us from the sea of sameness,” Stancil says. Most eateries found on any major highway dish out typical fare like burger, fries and beer, but Main Event offers “chef-inspired food and you can play a game. It’s a pleasant and unexpected surprise,” he says.

Main Event
With menus geared toward adults, eatertainment concepts, like Main Event, are a far cry from the Chuck E. Cheese model.

Pinstripes, a Northbrook, Illinois-based chain of eight eateries with four in the Chicago environs that specializes in upscale food with playing bocci and bowling, is also on the fast track. It’s expanding to Cleveland, Fort Worth, Houston, and San Mateo, California, in 2018.

By offering gaming experience plus quality dining, Pinstripes is in the “sweet spot given the Amazon effect on traditional retailing,” says its CEO Dale Schwartz. He says the irony is most people these days are tied to their iPhones but crave face-to-face interaction. “People are disconnected with real humans in forming quality connections. With Pinstripes, we’re going back to the future by embracing human connections,” he says.

But it’s the food and beverage menu that retains Pinstripes’ clientele. “We offer sophisticated fun. Everything is made from scratch, and we offer a phenomenal wine cellar and craft beers, in a comfortable family friendly environment,” Schwartz says.

Schwartz says the intense competition forces Pinstripes “to be hypersensitive to pick the right location and continue to grow at a measurable controlled pace. We’re opening four or five locations a year; we’re not opening 15 to 20 a year.”

Schwartz says about 75 to 80 percent of its revenue stems from food and beverage. And people come in for Italian American food with an inventive spin including Italian jambalaya, homemade gnocchi and grilled children with a spicy cilantro.

He says Pinstripes has carved out its own turf in the eatertainment industry. By comparison, Punch Bowl Social “is more focused on urban locations and Dave and Buster’s skews younger than ours,” he says.

Topgolf, says its website, offers, “competitive golf game for all ages and climate-controlled playing bays similar to a bowling lane.” Players use real golf clubs and golf balls, aiming for targets on a 215-yard outfield. Each ball is microchipped and tagged to the player’s account and players receive instant feedback on a TV screen.

Punch Bowl Social
Punch Bowl Social stresses its upscale, chef-driven menu, which produces 89 percent of its revenue.

But its CEO Erik Anderson points out that each venue offers an accomplished executive chef and chef-driven menu. He says that half of its customers are “non-golfers,” and it attracts an array of guests for “date night, a corporate event, happy hour, breakfast or a birthday party.”

Moreover, Topgolf has gone global. It has 36 venues throughout the U.S. and U.K. and is expanding next year to Australia and Mexico. Anderson says it’s planning to expand by seven to 10 outlets annually over the next few years.

Robert Thompson, CEO of Punch Bowl Social, which has 11 outlets with six in the works for 2018, says its urban setting differentiates it against rivals. “Everyone of the other brands orient toward the suburbs.  Urban is our sweet spot,” he says.

He also says Punch Bowl Social stresses its upscale, chef-driven menu, which produces 89 percent of its revenue, more so than most rivals.

To keep its edge, it’s introducing virtual reality parlors, where participants can see on a screen what others are seeing.

With competition heating up in the eatertainment industry, Pinstripes’ Schwartz admits the odds are that there will be winners and losers. “The strong will get stronger, and the weak will get weaker. With people’s ability to enjoy prepared food at Whole Foods and their equivalents, restaurants and eatertainment eateries will have to execute and deliver phenomenal food, consistent service and superior décor” to survive.

Punch Bowl Social Thompson envisions that some mergers-and-acquisition could transpire in the eatertainment industry in the next few years. “There could be some consolidation,” he says.

Thompson also observes that eatertainment is taking revenue dollars from traditional casual dining spots. “Instead of going for traditional casual dining, diners are spending their drinking and dining dollars in eatertainment,” he says. Hence, eatertainment will prosper while traditional dining continues to plummet.

Main Event’s Stancil also underscores the marketplace is wide enough for several chains to succeed with specific niches. “Many times there’s a Main Event located a mile from a Topgolf, and each caters to someone a little bit different,” he says, suggesting all can thrive.


Subway’s Sales Continue To Slow, 5 Factors That The Brand Should Consider Before Changing It’s Path

October 23, 2017

Subway’s sales struggles continues much like the rest of the over-bloated restaurant industry. Consumers are faced with so many options for meals away from home and restaurant operators are seeing their profit margins squeezed so tightly that many operators are losing money, closing their doors or putting their units up for sale. Today’s battle is over share of stomach and driving more diners to order from the restaurant whether it’s for dine-in, takeaway or delivery. So before sandwich giant Subway considers developing new brands or making acquisitions, they should review the current industry landscape and consider these 5 issues that affect their business:

1. Industry Saturation – although the recent recession forced many operators out of business, the downturn has also created an opportunity for chain restaurants to expand and increase their restaurant base. Franchising continues to create opportunity for new owners and entrepreneurs adding restaurants with the intention of becoming multi-unit operators. Inexperience has led many to close their doors or sell off their operations at dimes on the dollar.  Operators run an average of 5 percent profit margins and for all those that succeed in double digits, many are breaking even or losing money.  Within the quick-service and fast casual sandwich segment, chains have continued to expand regionally and nationally. Fast casual chains Jimmy Johns, Jersey Mike’s and Firehouse Subs have continued to open locations across the US, providing high-quality freaky fast subs and fresh made-to-order, portable meals. Demand continues to grow for these subs but each location struggles to build momentum when stores open nearby with $500,000-$800,000 in annual sales. More restaurants water down demand for existing stores.

2. Consumer Price Value Equation – Subway created a terrific success with $5 footlongs or what many consider 11-inchers. In fast food, the $5 price point is golden and it’s difficult to compete when so many four and five dollar value meals continue to satisfy value-seeking consumers. Little Caesar’s $5 hot-n-ready pizza and Steak n’ Shake’s $4 value meals create significant price value for lower income and younger consumers.  With Subway’s higher price points, the brand has increased the gap from fast food. Quality hasn’t improved enough to gain ground on the higher priced, higher quality offerings from fast casual brands so consumers continue trade up to fast casual for quality and trade down to fast food for price.  Subway remains on the fence in no-man’s land.

3. Technology Expectations – Technology continues to appeal to consumers, especially GenZ and Millennials. Brands that have been aggressively investing in technology like Dominos have continued to see strong same store sales growth. The trick is to make it simple for older consumers and easy for younger consumers who expect smart phone apps. Ordering applications are incentive to use a brand but rewards for frequency and loyalty are what drives customers to keep your app relevant and build their frequency. Getting free food is another strong form of value and helps develop deeper behavior towards ordering habits. Just like the reduced need for cash has made the wallet obsolete, punch card systems aren’t cool and are often lost or forgotten.  Integrated loyalty programs are more contemporary today. Free Wifi can also create a lingering opportunity for customers and create that third place for customers to escape from home or work.

4. Staying Fresh – Fashion changes with each passing season and year-to-year. Many brands wait 7-10 years to update their interiors and it can take 3-4 years for a big system like Subway to update to a new décor across their entire system. It can be costly and a store may close to update their interior. Some of the most important features today are added for comfort and efficiency.  Televisions provide distraction for single diners, USB and electrical outlets provide customers with added value to charge their devices and seating configurations can improve the experience for different occasions. Restaurants are often used for communal study groups with large tables, comfortable seating for social occasions and booths for business meetings. Although many Subway restaurants are designed for takeout, improving the appeal for a broader array of occasions can drive greater traffic to a location. The entire location doesn’t have to be remodeled if continuous evolution and updating can take place and customers can see the change.

 5. Broad Menu Offering – Today’s sandwich chains have broadened the menu to include soup, salad and side items. Often, side options create craveability and can increase check average. The typical Subway order includes a sack of chips and a drink.  At most deli’s, soup, salads and dessert provide strong opportunity to impulsively upgrade your meal into a more profitably order. Signature sides especially designed to accompany new, innovative sandwich lines, seasonal desserts that drive comfort and perhaps a whole or sliced pickle can give customers more options at Subway to keep their customers from going elsewhere. Finally, adding new beverage options to the mix can be another way to build their customer counts.  Beverage only and snack occasions are great off-peak traffic drivers and can keep stores busy all-day.

Subway should consider a barbell strategy for their menu offering. Offer smaller sandwiches for high value ($3-$4), larger sandwiches for middle of the road ($4-$5) and build into a higher quality premium sandwich line ($6-$8) that competes with fast casual brands. Investing in their dining room to make it more occasion friendly and improving their technology to simplify the experience will give customers greater reason to use Subway more frequently. Innovation will be a strong driver but you have to understand what the customer wants and give it to them.  Overall, Subway has a successful brand, broad customer base and fills a big gap in the industry. Before leadership overlooks what made the brand a global leader and changes course, they should consider smaller, meaningful adjustments to what the customer wants.

Darren Tristano

 


Where the consumer dines is still a big question but simplicity is still the answer for consumer meal purchases.

September 19, 2017

A wave of options are now available for restaurant meal delivery like Grubhub, Postmates and Uber Eats but can American consumers afford to pay $12-$15 for the convenience?  For those who purchase meal kit delivery from Blue Apron or groceries from Instacart, the time is still a concern as they prepare, cook and serve a meal to their family, and don’t forget the cleanup afterwards.  Today’s customer isn’t just looking for affordable restaurant quality, they are looking for simplicity.  For consumers willing to take the time to pick up their takeout meals, there is a new service available that may shift their behavior from delivery to self-serve pickup.

MealpalA new platform from startup MealPal creates a subscription service that allows users to subscribe to a list of restaurants for takeout lunches or dinners.  The service will be available in the US, UK, Canada and Australia.  The fixed fee will fall around $7 for dinner and $6 for lunch providing a selection of restaurant entrees available for pickup.  This model allows the participating restaurant to choose a signature meal that they can plan for demand and which better insures quality execution.  The restaurant can build a margin on the higher volume item and still make money on the transaction.

Although many consumers are comfortable with delivery fees, the broader lower and middle income consumer will find this service more affordable and accessible.  Within the urban markets, younger consumers will find this a high-value that allows Millennials and older GenZ the opportunity to purchase restaurant quality meals more frequently.  Older Boomers that are retiring will have options to purchase meals within their budgets and enjoy their lifestyle.

After receiving $20 million in funding, MealPal is in a strong position to leverage their platform because according to the company, they are making a margin on each order today.  Leveraging technology toward future profits has been the strategy of many startups but showing profitability this early on will drive chances of success long into the future.

As consumer behaviors evolve and trends change, restaurants offerings have become very complex. A focused meal option with MealPal can be easier for restaurants to execute and consumers to keep it simple.


Innovation in chocolate may help to reverse the decline in chocolate demand

September 13, 2017

Chocolate, a craveable comfort food has seen declines in consumer demand over the recent years.  So much that big chocolate companies have been forced to reduce staff and focus on greater innovation and solutions.  How do you make chocolate better?

pibk-chocolateSeveral trends are impacting the chocolate industry, driven by younger Millennial and GenZ consumers aged 12 to 40:

  • Premiumization is driving specialty products that are higher priced and promise better quality
  • Natural and real ingredients are in demand requiring the elimination of artificial flavor and colors
  • Fair trade practices are expected from younger consumers for suppliers to pay fair wages
  • Spicy and Savory flavor trends are driving chili pepper, bacon and sea salt ingredient combinations
  • Health and Wellness concerns are pushing manufacturers to reduce sugar and sodium content

The cost of cocoa beans have been rising and consumers are very price sensitive to paying more for their chocolate which is squeezing margins and lowering demand especially in Europe.

A recent discovery by Barry Callebaut, the first in 80 years gives us Ruby, naturally pink chocolate.  Pink chocolate isn’t new but what is new is that it has been manufactured without using artificial coloring.  Made from the ruby cocoa bean, the processing provides natural pink coloring through the use of the ruby bean.  This new innovation offers a berry flavor that is unique, offering a less bitter, sour flavor that combines with the sweetness of chocolate.

Subject to FDA approval, the Ruby Pink Chocolate is sure to be a hit on Valentine’s Day but more importantly, it should be a hit with millennial consumers.  Known for gravitating to “what’s new and what’s next”, this new chocolate likely will be considered a generation-defining product that is different from “what their parents eat”.  The buzz alone from this innovation will provide ample reason to sample the new product.  Chocolate is still considered one of the world’s affordable indulgences and we should expect to see innovations like Ruby Chocolate Martini’s, Pink Hot Chocolate, Cake Pops Hot Lava Cakes.


Supermarkets looking to add restaurants to grow sales

September 12, 2017

With the oversupply of restaurants driving tough competition in the foodservice market, supermarket brand Kroger Co. looks to add to the supply by expanding their strategy to include restaurants.  Kroger aims to expand to a 360 degree focus in an effort to increase share of stomach and consumer wallet.

According to Technomic, supermarket foodservice is expected to grow 6.5 percent in 2017, outperforming lackluster restaurant industry growth.  Strong competition from meal delivery brands like Blue Apron and HelloFresh are putting pressure on the supermarket chains with meals delivered to the consumer’s doorstep.  With the threat of AmazonFresh grocery delivery, food retailers have to find new ways to keep customers coming through their doors.

Kroger00

Kitchen 1883, named to include the year Kroger Co. was founded, will give Ohio-based Kroger a way to utilize some of their existing square footage to maximize sales per square foot.  With so much competition from big-box stores and warehouse clubs like Target and Costco, the traditional supermarket “center-of-the-store” has seen tough times as consumers find greater value in stocking up elsewhere.  Whole Foods has found success with their 365 Everyday Value products and has found good traction with their foodservice offerings.   Expanding from retail food to foodservice is a natural migration but requires some very specialized focus and differentiation in the approach.

Often, retailers underestimate the effort needed to shift into prepared foods and restaurant operations.  Success requires hiring and training experienced foodservice professionals.  Cross training cashiers and stock handlers very often creates a poor environment.  It’s necessary to create a separate strategy, utilizing dedicated staff who with food handling, food safety experience.  Building a menu that resonates with value and targets the appealing menu items that taste great can also be a difficult task for even the most experienced restaurant operators.  Lastly, creating an environment that is clean and comfortable for patrons can make or break a concept as the customer experience has to lead to return visits and frequency.

For Kroger to succeed, the Kitchen 1883 will have to facilitate existing customer trial and maximize the convenience factor for shoppers.  There will be strong opportunities for quick breakfast and lunch occasions, snacking and beverage stops and takeout opportunities for dinner.  Poor service can tarnish the brand, but good service can lead to increasing their share and trying to give customers another reason to shop Kroger more frequently.


Does Cheetos’ New Mashup Make Sense?

August 15, 2017

PepsiCo will open a popup restaurant in New York City next week featuring dishes inspired by the popular snack Cheetos and prepared by Chef Anne Burrell.

cheeto 1

Several fast food chain restaurants have recently partnered to leverage the Cheetos brand. Burger King offered the Mac n’ Cheetos, deep-fried mac n’ cheese coated with Cheetos; Taco Bell stuffed Cheetos in their Crunchwrap Slider; and Taco John offered the Flamin Hot Cheetos Burrito. There appears to be no shortage of innovation with popular snack products.

Cheeto

So does the mashup make sense? Many restaurants are relying on salty items to create craveable opportunities for consumers to indulge in impulse-driven occasions. The majority of consumer restaurant occasions are unplanned and driven by impulses and hunger cravings. But there is often a great deal of risk associated with new, innovative products so partnering with a familiar, popular consumer brand can reduce the inherent risk associated with limited-time offering.   Many mashups have had success as consumers trust the product, understand expectations and often embraces the spirit of adventure. Younger Millennial and Gen Z consumers are a strong target for these products as they are focused on what’s new and what’s next. They are less focused on health at their ages and are trying to find items that are hip, cool and very different from what their parents ate.

So how does a celebrity chef add value to the equation? Creating exciting new offerings raises the bar on interest and price points. When it comes to New York City, foodies reign and tourism combined with affluent consumers creates a unique marketplace for new appealing concepts with higher price tags. By partnering with a celebrity chef, the Cheetos concept provides immediate credibility and strong social media interest and outreach. There is little doubt the concept will build strong interest and long lines of interested eaters. If the food passes the test, the new offering can be a winner.

Darren Tristano

Forbes August 9, 2017 Link


Mom-and-Pop Restaurants are Trouncing America’s Big Restaurant Chains.

July 1, 2017
‎May‎ ‎16‎, ‎2017‎ ‎4‎:‎00‎ ‎AM

 

There’s a limit to unlimited breadsticks after all.

Americans are rejecting the consistency of national restaurant chains after decades of dominance in favor of the authenticity of locally owned eateries, with their daily specials and Mom’s watercolors decorating the walls.

It’s a turning point in the history of American restaurants, according to Darren Tristano, chief insights officer at Chicago-based restaurant research firm Technomic.

Free-marketing websites, such as Yelp Inc., have boosted the fortunes of independents in the age of McDonald’s, Cracker Barrel, Domino’s, Taco Bell, Olive Garden — the list goes on. In a shift, annual revenue for independents will grow about 5 percent through 2020, while the growth for chains will be about 3 percent, according to Pentallect Inc., an industry researcher in Chicago. Sales at the top 500 U.S. chains rose 3.6 percent last year. The gains were larger, 3.9 percent, for the whole industry, Technomic data show.

Closing Locations

Large chains seem rooted in the American experience. But times, and tastes, are changing. Customers these days believe locals have better food, service, deals and even decor, the Pentallect report said.

Sales are reflecting that. Last year, revenue was up 20 percent at DineAmic Group in Chicago, which owns nine different restaurants.

Honors System

Donna Lee

Source: Brown Bag Seafood
At Chicago’s Brown Bag Seafood Co., where sales jumped 63 percent in 2016, lunch customers can grab a cookie out of the “honors system” mailbox for just $1. There are homey touches, like a watercolor painting of the Clark Street Beach in nearby Evanston, Illinois, that founder Donna Lee’s mother painted.

Lee started Brown Bag in 2014 after realizing chains didn’t do it for her. “It feels like you’re there only and solely to get your food quickly and get out the door,” she said. “There really is no charm.”

Daily-Catch powerbox

Source: Brown Bag Seafood

Brown Bag’s top seller is its daily-catch powerbox with grilled fish — barramundi was on the menu on a recent weekday — served atop quinoa, wild rice and spinach for $9.99. A nearby Panera Bread Co., which has more than 2,000 locations in 46 states and Canada, charges the same price for a strawberry poppyseed salad with chicken.

Some chains are trying to imitate the success of smaller, independent brands. At Maggiano’s Little Italy, which has 52 locations and is owned by Chili’s parent Brinker International Inc., traffic has been on the wane. Same-store sales dropped 1.6 percent in the most recent quarter for the fourth-straight decline.

Maggiano’s has new menu items and meals that cater to customers’ allergies and diets — think vegetarian, vegan and the occasional gluten-free ravioli. The chain updated its menu to include executive chef photos and short bios, and in February it introduced an emblem of millennial hip: brunch.

“The experience of dining out has become much more important than it was before,” said Larry Konecny, chief concept officer.

Bullish on Mom

Restaurant suppliers also have noted the trend. Diners prefer the experience, service and value offered by independent restaurants, Pietro Satriano, chief executive officer of US Foods Holding Corp., said during a conference call this month. “Growth with independents was very solid” in the latest quarter, he said.

While national chains advertise like crazy, mom and pops depend mostly on word of mouth and Yelp reviews.

“It’s not the same barriers to entry that there were, that if you put up this group of restaurants that you have to have this big TV campaign. No, you don’t,” said John Gordon, restaurant and franchisee consultant at Pacific Management Consulting Group in San Diego.

It’s “authentic” and Instagram-able experiences that diners are searching for these days, Gordon said. “It’s not experiential to sit in a rundown McDonald’s.”

Full Story: https://www.bloomberg.com/news/articles/2017-05-16/mom-and-pop-joints-are-trouncing-america-s-big-restaurant-chains