What was important to note on the labor front, too, McGowan adds, is how and when guests started to visit during COVID changed. They began to self-select “shoulder periods” to avoid crowds. Peak hour stability of old was gone, and Fogo de Chão didn’t want to get caught undermanned.
"We knew we had to focus on the joy of our team members, our guests, and our community and we wrapped all that together with our team and said let’s focus on our journey back to joy," McGowan says.
Rewinding to life before coronavirus, there were several baselines that separated Fogo de Chão from traditional steakhouses.
Its customer base mixed 43 percent millennials, 31 percent Baby Boomers, and 36 percent Gen Z. Those figures averaged 33, 35, and 32 percent, respectively, among peers.
Fogo de Chão’s consumers are highly ethnic. They’re 42 percent female. The restaurant’s occasions split as 16 percent business, 33 percent date/spouse, 23 percent friends, and 26 percent family meal.
These have held and supported dine-in innovation. But what about life outside the four walls, where the COVID disruption has taken shape?
Fogo de Chão’s off-premises business was just 3–5 percent of sales in October, meaning the chain got to 96 percent of year-ago business without covering a massive swath with takeout and delivery. Its peer group has ranged, generally, from 40–60 percent in recent months. Fogo de Chão marched into the calendar with six consecutive years of positive traffic and has put that at the forefront. “It’s not taking labor away and driving labor costs out. It’s about driving hospitality in. Driving experience in. And that’s how you drive traffic,” McGowan says.
“We were focusing on delivering joy within our restaurant. And as you know, that’s more profitable,” he adds. "That allows me to employ more people. That allows us to connect emotionally to our consumers. All of that is just really where I would say the last 10 months have been.”
Fogo de Chão leaned into innovation instead of retraction. It introduced Porterhouse and Wagyu New York Strip. It turned parking lots into seating and brought out propane heaters.
But off-premises gains haven’t been insignificant or glossed over. The company generated roughly $10 million in revenue from outside channels since COVID and saw mix rise as high as 8–10 percent (14–15 percent in some units) during the holidays as customers ordered family meals.
There are a series of new channels Fogo de Chão believes can propel $50 million in incremental annual revenue within three years.
- Off-premises and technology
- Butcher shop
- Curbside to-go
- Third-party delivery
- Online ordering
- Brand licensing
Fogo de Chão is now active with every third-party delivery aggregator after going 40 years without any off-premises business at all. It had nine locations in test before COVID, with no real timetable for expansion. Within nine days, however, the chain added to-go ordering and packaging, and created WhatsApp, YouTube, and live web videos to train operators. It sold alcohol out the door where possible, including Fogo de Chão’s Founders Trilogy Collection, which includes three wines and sells for $89. Guests began to dine-in and order these to-go. Internal, retail off-premises sales jumped.
Fogo de Chão then struck a licensing agreement to market different segments of its brand in grocery, from butcher meat to meal kits.
With catering—one of the pandemic’s deepest-cut offerings—McGowan viewed evolution through an experiential lens as well. Fogo de Chão served “a lot” of weddings during COVID, he says. Either by putting up tents in parking lots or bringing grills to location. There were more requests than grills, McGowan says. “So we’ll be investing in capital and portable grills for reach location over the next 24 months to continue to build that business,” he says.