Don’t Count Out These Legacy Brands

It’s no surprise that the restaurant industry is a tough place to do business, especially now, when diners are more aware of restaurant operations and concepts have been tasked with meeting a variety of needs. Patrons crave both indulgence and better-for-you options. They seek authentic ethnic fare, but they also want items with local ingredients. Fresh, made-to-order items are key … but so is speedy service.

Clearly, chain restaurant operators have a lot on their plate.

With fickle patrons, increased competition and the still-recovering restaurant industry, some once-top restaurant chains have fallen through the cracks over the last several years and have been struggling to regain their foothold. For some, the loss in sales and unit counts may be too much and they may never return to the top. But that doesn’t mean they’ve given up. From brand refreshes to new concepts to international expansion, the following legacy chains are showing they’re committed to doing all they can to revamp their company.

1. Bennigan’s

Bennigan’s was a casual-dining pioneer. Developed by Norman Brinker and debuted in 1976, the “fern bar” offered a casual menu and heavy adult-beverage focus in an Irish pub setting. Bennigan’s grew rapidly in the ‘80s and ‘90s, along with the then-novel casual-dining segment.

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What went wrong: As competition increased, Bennigan’s failed to keep pace with the likes of Chili’s and Applebee’s, and its menu, stores and service grew tired. Following then-parent S&A’s Chapter 7 bankruptcy in 2008, all company-owned stores were shuttered; many franchised restaurants followed suit.

What’s happening today: The system was taken over by Atalaya Capital Management LP and CRG Partners, which refueled the chain over the next few years. Today, Bennigan’s has a new logo, restaurant prototype, menu and service emphasis, all meant to return the chain to its social pub roots to spark nostalgia in lapsed customers while attracting younger guests. According to Bennigan’s CEO Paul Mangiamele, the chain is steadily increasing its domestic store count while continuing to expand overseas, with expansion plans in place for India, Korea, Central America and other international markets.

While much has changed, fans of the chain will be delighted to know they can still get their World Famous Monte Cristo sandwich. In addition, in 2013, Bennigan’s announced it’s resurrecting its casual-dining Steak & Ale concept with a new gastropub prototype, set to debut in late 2014. The concept will features some returning traits, such as the chain’s famous salad bar, as well as some new features like a less cluttered décor, stained-glass windows that allow for a partial view of the kitchen, and a “Prime Rib Roaster” displayed in the dining room.

2. Fazoli’s

Fazoli’s was launched in 1988 by Jerrico Co., the same company that founded Long John Silver’s. With large, welcoming dining rooms and perks like unlimited breadsticks, the concept was promoted as an affordable alternative to casual-dining restaurants and grew rapidly in the ‘90s.

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What went wrong: With its carb-heavy menu, Fazoli’s was hit hard by the low-carb craze in the early 2000s. And as chains like Olive Garden and Domino’s improved their recipes and new Italian concepts like Piada Italian Street Food entered the mix, Fazoli’s struggled to keep up. Between 2002 and 2012, the number of Fazoli’s units in the U.S. fell by 44%.

What’s happening today: Fazoli’s is striving to be a solid competitor in the fast-casual Italian segment, with 10 units in the pipeline for 2014. In recent years, the company has revamped its menu, switched to using real plates and silverware, and changed its service model—instead of patrons receiving their food at the counter, servers bring their meal to their table and refill their beverages.

Additionally, in 2013, Fazoli’s debuted a new fast-casual concept, Venti Tre, that offers made-to-order piada sandwiches, pasta and salads that can be customized from a choice of at least 23 ingredients. The chain also launched a smaller prototype to fuel expansion in nontraditional locations such as mall food courts and travel centers.

The changes appear to be working—Fazoli’s said its unit count stabilized in 2013 after a decade of closures, and the chain has reported positive same-store sales 36 out of the last 45 months for its company-owned restaurants and 46 out of the past 48 months for its franchised units.

In a March 11 news release on the chain’s positive sales, Fazoli’s President and CEO Carl Howard emphasized its dedication to service and quality fare, saying, “the combination of increasing service after the point of sale and providing our guests with highly craveable products, all at a price point under $7, is proving to be a winning formula.”

3. Ponderosa/Bonanza

Ponderosa and Bonanza began as separate steakhouse concepts in the 1960s and were consolidated into one brand in 1997 by then-parent company Metromedia Restaurant Group. By that time, Ponderosa/Bonanza had more than 600 units. Patrons frequented the chain thanks to its affordable options and all-you-care-to-eat buffet.

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What went wrong: Over the years, Ponderosa/Bonanza has faced stiff competition from casual-dining steak concepts like Outback Steakhouse and Texas Roadhouse, who offered higher-quality steaks for just slightly higher prices. In addition, patrons seeking variety began turning not to buffet concepts but to varied-menu casual-dining chains, as patrons started to value quality over quantity. In 2008, Metromedia Steakhouses Co., the division of MRG that operated Ponderosa/Bonanza, filed for Chapter 11 bankruptcy. At the time of the filing, there were more than 300 Ponderosa/Bonanza units systemwide. By the end of 2013, the company had about 220.

What’s happening today: In 2013, Ponderosa/Bonanza brought on a new president and CEO, Tom Sacco, and under his leadership, the company has debuted plans for a brand refresh that it’s been rolling out this year to all locations. The refresh includes interiors with brighter and fresher graphics, menu boards with digital displays and a redesigned buffet area with eco-friendly plateware. Menus are also being revamped with new appetizers, entrees and healthier fare, plus seasonal menu enhancements such as topped steaks and globally inspired seafood options.

The company has also been expanding internationally, particularly in the Middle East. In mid-2014, the company is scheduled to launch a new, full-service, more relevant Bonanza Steakhouse positioned to compete with other full-service, casual-dining steakhouses. Later this year, Ponderosa/Bonanza plans to launch a third steakhouse brand—a new, more contemporary concept—targeting the 25–45 demographic.

4. Sbarro

Sbarro’s history dates back to 1956 when the Sbarro family emigrated from Naples, Italy, and opened an Italian grocery store in Brooklyn, NY. There, they served authentic Italian fare such as made-from-scratch pizza and pasta. In 1967, the Sbarro family launched the chain’s signature quick-service mall prototype in Brooklyn’s Kings Plaza Shopping Center. The mall prototype allowed Sbarro to rapidly expand, and by 2010, it was operating more than 1,000 units in 41 countries.

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What went wrong: Like Fazoli’s, Sbarro was hurt in the early 2000s when no- and low-carb diets were popular. Also, as a predominantly mall-based concept, Sbarro suffered as a result of the recession and decline in mall traffic. In April 2011, the chain filed for Chapter 11 bankruptcy to reduce their debt by approximately $200 million. The company emerged from bankruptcy at the end of 2011. In February 2013, with mall traffic continuing to decline, Sbarro closed about 180 company-owned U.S. units that were underperforming. In March 2014, Sbarro again entered Chapter 11 bankruptcy as a result of their remaining debt burden and the number of underperforming mall locations.

What’s happening today: With new leadership and a revamped infrastructure, Sbarro is restructuring the brand to better position it for future growth. The company said it’s undergoing “a complete rebranding with an emphasis on the determination and commitment to pride, passion and doing things right that the family inspired over 50 years ago.”

Sbarro is emphasizing its signature New York pizza, baked fresh all day in traditional stone ovens and featuring made-from-scratch dough prepared daily, San Marzano-style tomato sauce and hand-shredded 100% whole-milk mozzarella. The chain is also heightening its execution with improved operational performance and equipment to ensure every slice is sold hot and fresh.

To balance financial growth with an off-mall presence and to capitalize on the growing fast-casual pizza segment, Sbarro debuted a new fast-casual concept, Pizza Cucinova, in Columbus, OH, in 2013. Pizza Cucinova currently has two locations in Columbus and offers traditional Italian-inspired artisan-style pizzas and salads for lunch and dinner.

Sbarro executives say the reorganization and rebranding are off to a strong start and that they’re excited to begin a new chapter for the company.

5. TCBY

TCBY, which stands for “The Country’s Best Yogurt,” has been serving frozen yogurt since 1981. The global quick-service chain offers both hand-scooped and soft-serve treats made with real dairy yogurt. In 2000, it was acquired by Mrs. Fields Famous Brands (now Famous Brands International), who launched cobranded TCBY/Mrs. Fields units.

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What went wrong: TCBY was hit hard by increased competition in the frozen-dessert sector from premium ice-cream concepts like Cold Stone Creamery and the rise of self-serve frozen-yogurt chains like CherryBerry. TCBY introduced its own self-serve frozen-yogurt prototype in 2010, but the chain was already in decline. Between 2002 and 2012, TCBY closed 1,188 units.

What’s happening today: TCBY has seen modest unit growth in recent years and is seeing that growth accelerate in 2014, fueled by a change in ownership in 2013. That summer, global asset management firm Z Capital Partners acquired TCBY parent company Famous Brands International and launched an expansion plan for 50 TCBY units—all self-serve prototypes—in the U.S.

In the last year, Famous Brands has made key personnel changes by appointing a new CEO and senior vice president of strategic development, has introduced more healthful treats such as dairy-free Silk Chocolate Almond frozen yogurt made with Silk almond milk, and has driven franchise growth with TCBY and Mrs. Fields cobranded stores. This year, the chain plans to open 85 units and focus on its new in-store gifting business.

6. Tony Roma’s

Tony Roma, a former Playboy Club manager, opened his first namesake restaurant in Miami in 1972. It became known for its baby-back and St. Louis-style ribs—along with an extensive menu of steaks, chicken, burgers and seafood—served in a relaxed atmosphere. Three years later, the concept was purchased by Dallas Cowboys owner Clint Murchison and attorney Jack Peeples. NPC International Inc., the largest franchisee of Pizza Hut, acquired the chain for $20 million in 1993 and spun it off in 1998 to Sentinel Capital Partners.

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What went wrong: The brand has been struggling in the U.S. for some time. After filing for Chapter 11 bankruptcy protection, Sentinel sold Romacorp to bondholders as part of its restructuring in 2006. Between 2002 and 2012, Tony Roma’s closed 114 units in the U.S. The chain ended 2013 with 37 U.S. locations and a 9.2% decline in U.S. restaurant sales.

What’s happening today: Tony Roma’s is expanding both domestically and internationally, recently launching units in Bloomington, IL; Brooklyn, NY; Chile; Kobe, Japan; and Malaysia. The chain operates more than 150 units in 34 countries, and at least 17 new Tony Roma’s restaurants are expected to open domestically and internationally over the next year.

In the last 12 months, the chain has signed more development deals than it had signed in the last four years, including a deal to open 25 units in India, Bangladesh, Sri Lanka and Nepal. Tony Roma’s also plans to launch another New York location in Long Island, two more sites in Malaysia, at least three restaurants in Myanmar and has signed several development agreements for Mexico’s Yucatan and San Luis Potosi markets.

Additionally, Tony Roma’s debuted a new concept, Tony Roma’s Fire Grill & Lounge, at its renovated Orlando site late last year. Designed to appeal to a younger demographic, the restaurant features a chef’s table, an open kitchen, a fire pit and a lounge area along with a new menu that Tony Roma’s is considering rolling out to other locations. The menu only features a few rib options and instead highlights gourmet entrée selections like pan-seared Alaskan cod with eight-vegetable hash, pearl couscous, red quinoa and lemon-basil pesto. A second Fire Grill & Lounge is slated to launch in the fall in Winter Park, FL.

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