Forward-thinking restaurant concepts aim to continually evolve—sometimes slowly, sometimes aggressively—to stay ahead of consumer trends
Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
The same may be true of restaurant concepts. Those that can stay ahead of consumers’ changing needs and demands are more likely to succeed long-term. There are several up-and-coming trends in emerging brands’ business models and in how concepts are reinventing themselves in today’s competitive climate. This column examines a few of these trends, ranging from stylistic changes to better-business practices.
One example of a chain building its niche through brand extension is Subway. Units of the world’s largest quick-service sub sandwich chain typically average 1,000 square feet and seat 25 guests. Stores have a Tuscan-inspired décor, and the centerpiece is a long counter where employees create sandwiches from fresh ingredients, taking directions from customers as they do.
Subway has created a casual café prototype in an attempt to compete with chains such as Starbucks in the breakfast market while also competing with fast-casual sandwich chains. Restaurants are larger and much more upscale than traditional Subway locations. Contemporary upgrades include stone walls, fireplaces, natural wood flooring and leather armchairs. The units also have high-definition televisions and offer free WiFi.
The results have been positive. Subway, not content to rest on its enormous success, has evolved, working in elements of what contemporary consumers are seeking while retaining its original differentiators.
Stylish Ideas from International Markets
Global chains have learned a lot from the international markets into which they’ve expanded. Burger giant McDonald’s, for instance, modifies its familiar interior and exterior designs to fit the specific cultures of the countries in which its units operate.
In Europe, where diners strongly value the experience of dining out and are known to linger, the chain strives for a more upscale, contemporary experience and “hip” feel. Many locations aim to challenge consumers’ perception of McDonald’s as a chain that represents American culture. European diners tend assume that if the restaurant looks upscale, the food will match the atmosphere.
One prototype has abandoned its ‘70s-style interior and creates elegant and comfortable spaces to shift the restaurant to a place to linger. Wood, leather and stainless-steel accents contemporize the interior. Even the children’s play areas get an upgrade; they are relabeled as Ronald Gym Clubs.
Once the giant of the frozen-yogurt niche, TCBY has been fading as self-service concepts have emerged. To regain its foothold, TCBY started to rebrand its concept, working a self-service feature into its operations to meet the demands of today’s Americans for customization. The brand makeover includes a more sophisticated décor with pendant lighting and neon accent colors.
TCBY also has been cobranding its units with Mrs. Fields gourmet cookie shops, offering customers a choice of two sweet treats with strength in different dayparts.
Full-service restaurant operators are selecting smaller locations than they once would have, leading to lower operating costs. Darden Restaurants, the largest company-owned and operated casual-dining company in the United States, operating under trade names Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Seasons 52 and Bahama Breeze, has picked up on the trend towards downsizing restaurants.
In smaller markets, the company has begun using a new prototype of a single building to house two different concepts—its Italian brand Olive Garden and seafood specialist Red Lobster. The restaurants have separate entrances, dining rooms, bars and menus. They share a kitchen, storage area and restrooms. Staff can be cross-trained to serve both restaurants’ demands. There is one dual-location open in Florida. This type of synergistic operation cuts down real-estate and operating costs, so it is likely that we will see more of these combined-concept locations.
Reaching Out to the Community
Younger generations in particular want an emotional connection to the brands they frequent. Firehouse Subs, a fast-casual sandwich shop specializing in hearty subs using high-quality meets and cheeses, is one chain that excels in reaching out to the community.
The concept was founded by brothers Robin and Chris Sorensen, who worked as fire fighters and established a firehouse theme for the chain. Staying true to its roots, Firehouse Subs established a foundation to help firemen. It raises funds via donation canisters at the store and by selling 5-gallon pickle buckets for $2 each. The money then goes toward equipping, educating and funding local fire fighters and other public-safety organizations.
Patrons feel better about going to restaurants that give back to the community, so this type of charitable program can increase sales and customer loyalty.
Enhancing Convenience with Customer-Facing Technology
Concepts that employ the most innovative technology get a lot of buzz, particularly with the younger generation. Stacked: Food Well Built was developed to be appealing and convenient to a younger demographic. The fast-casual “better-burger” concept offers an unusually high level of technology integration centered on an easy-to-navigate iPad ordering system.
The iPads sit on each table and are wired with alarms to prevent theft. The devices are programmed to allow guests to browse the menu, order their meal and pay at their table without the help of a waiter. While the process can be a challenge for first-time users, this trendy technology allows tech-savvy Millennials to connect easily with the brand. Customers can also pre-order their meal online for dine-in or takeout.
The chain has an upscale, gourmet positioning, and its customizable offerings are often on the pricier side. The success of Stacked shows that Millennials and affluent consumers do not mind spending a bit more money on quality products paired with technology that speaks to their needs and lifestyles. The chain currently operates three locations in Southern California.
Adapting to Consumer Shifts
Even the most traditional menu niches show evidence of evolution. Full-service burger chain Red Robin responded to the “better-burger” phenomenon by creating Red Robin Burger Works, a smaller prototype with a simpler menu. While a typical Red Robin store is about 6,000 square feet, a Burger Works is between 2,000 and 4,000 square feet. The smaller kitchen and limited menu allow for faster service, and a toppings bar appeals takes steps from the back of the house and puts them into the hands of the customer, who sees the customization as an asset.
The streamlined concept allows Red Robin to continue serving the same high-quality burgers that made it a big brand, but the emphasis on speed and the self-service toppings bar are adaptions to the shift in consumer preferences.
Ruby Tuesday, a struggling casual-dining concept with a varied menu, is evolving by moving into other restaurant niches. The company first branched out by licensing hundreds of Lime Fresh Mexican Grill units, eventually purchasing the fast-casual Mexican chain. These new fast-casual customers broaden Ruby Tuesday’s customer base, with the ultimate goal of strengthening its bottom line. The shift downward into fast-casual Mexican provides a lower-risk, lower-capital growth vehicle in a menu segment that has shown strong sales and future potential.
Ruby Tuesday is also aiming higher with a shift upward. It converted underperforming Ruby Tuesday restaurants in prime locations to Marlin & Ray’s, a seafood concept that is more upscale than its previous brand. The company is attempting to move to the polished-casual level by continuing to offer a laid-back environment but rebranding to a more sophisticated, vibrant concept.
Segment “blurring” is likely to continue to increase as operators continue to adjust their concepts to adapt to a highly competitive market. As concepts broaden their menus and experiment with different service formats, it grows increasingly difficult for them to identify their competitors.
Operators are tinkering with their concepts and developing new ones to appeal to a young demographic. Contemporary concepts will flourish as the younger generation seeks out “newness” for its own sake, always wanting the next best thing. As part of this trend to “newness,” we expect technology to play a major role.
But food quality and value will remain the fundamentals driving consumer appeal. No matter how a concept evolves, it must continually strike a balance between these competing demands.
Darren Tristano is Executive Vice President of Technomic Inc., a Chicago-based foodservice consultancy and research firm. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations. For more information, visit www.technomic.com.