After nearly a quarter century as a successful casual-restaurant franchisee, Mike Scanlon still finds the business exciting.
“There are a lot of casual restaurants out here, and each one is trying to be relevant and stand out in the crowd,” says Scanlon, 57, president and chief executive of Thomas & King, one of Applebee’s biggest franchise operators. “It does make every day interesting.”
Thomas & King, based in Lexington, Kentucky, is the nation’s 22nd-biggest restaurant franchisee–second among casual-unit owners–with 2010 annual sales of $225 million, according to statistics from Technomic, Inc.
Revenue comes from 89 Applebee’s and six Carino’s Italian units encompassing seven markets in Kentucky, Ohio, Indiana, Arizona, and Pennsylvania. The company has about 5,760 employees.
It’s no surprise that a big franchise owner like Thomas & King operates Applebee’s restaurants. After all, Applebee’s is by far the biggest casual restaurant chain with more than 2,000 eateries worldwide.
The casual-dining segment is fairly mature, with most of its big players having been around for decades. The sector is generally thought to have started with T.G.I. Friday’s, the singles-friendly New York City bar that spread nationally during the ’70s.
Restaurants now battling it out in the casual space are being pressured by a variety of forces that played out during the Great Recession of the late 2000s, including cautious guests and a wildly competitive environment.
“Casual dining is being squeezed pretty heavily by the whole fast-casual explosion,” explains Danny Bendas, managing partner with Synergy Consulting Group, a Costa Mesa, California, consulting firm. “Fast casual is where a lot of the growth is right now.”
At the same time, casual competitors “have come out with significant price offers, so pricing pressure continues to be a challenge” notes Darren Tristano, executive vice president at Chicago-based Technomic, a consulting and market research firm.