Customer satisfaction is down at sit-down chains. Can it turn around?

One of the reasons quick-service restaurants have taken market share from full-serves can be credited to perception, according to two recent studies. The latest American Customer Satisfaction Index says sit-down restaurants are reporting their worst grades in more than 10 years. Customer satisfaction fell 3.7 percent and dropped below quick service for the first time in the report’s history.

There are several reasons for this but one is surely related to quality. Quick-serves have solidly shed the label of bad food, served fast. Given that the bar is now raised, consumers have to ask themselves, “What is the value equation of full service?” Simply, is the boost in price worth the better quality? Is it even better quality? Independent restaurants and smaller chains decreased 4 percent to an aggregate of 78.

“Full-service restaurants cannot lose to fast food on quality and customer satisfaction because they can’t compete on price. If a lower-price competitor has higher customer satisfaction than a rival that competes on quality, the latter is obviously in serious trouble. Low price alone rarely leads to high levels of satisfaction, but high quality usually does,” says Claes Fornell, ACSI Chairman and founder, in a statement.

Some full-service brands are shining, however. Chief among them, according to the data: Cracker Barrel. For the second straight year, the retail-hybrid chain topped the category with a score of 84—up a percentage point from last year. Cracker Barrel is coming off a mixed third quarter where same-store sales declined 0.4 percent year-over-year. The number was trending positive, however, as it fell 1.7 percent in February, 1.3 percent in March, and 1.2 percent in April. It was still a relatively troubling report given the brand’s 0.6 percent growth, year-over-year, in the second quarter. Average check increased 1.7 percent in the third quarter along with a traffic decrease of 2.1 percent and menu boost of 1.6 percent.

These numbers fall right in the heart of ACSI’s conversation. And it’s what’s lifting quick service to new heights, the study says. Check average and menu prices are rising at sit-down restaurants while traffic is falling. Meanwhile, quick-service units are lifting quality and staying relatively steady in other areas, which makes the nightly dinner debate more complicated than ever. One area full-service can retake market share is with off-premise dining. This category, which has been growing across the industry, is up 2.9 percent year-to-date, according to Industry tracker TDn2K. Casual dining as a whole began 2017 with four months of improved performance before sales slipped 1 percent in May.

Texas Roadhouse (82) was the No. 1 steakhouse, which is no surprise when you measure the chain’s performance. The casual dining brand impressed investors with a first-quarter earnings report that sent shares of the company’s stock to record highs. Texas Roadhouse reported comparable same-store sales gains of 3.1 percent year-over-year at company owned locations and 3.8 percent at domestic franchise units—around double the growth during the fourth quarter of 2016.

Texas Roadhouse also announced it planned to open roughly 30 new restaurants in 2017. ““… we’ve just keep doing what we’re doing, which is [being] very protective of our food quality and our price points and our flavor standards, same things you’ve heard forever and we kind of just stuck to that and continue to do that and gets work for us,” said Scott Colosi, president and chief financial officer, in a release at the time.

Outback (80) and LongHorn (77) were next in the steakhouse rankings.

Oliver Garden tied with Red Lobster at 81. This was a four-year high for Red Lobster, which gained 3 percentage points and improved for the second consecutive year. Red Lobster, the study points out, has invested in menu upgrades and higher-quality ingredients in recent years.

Applebee’s (79) and Ruby Tuesday (78) were unmoved and Chili’s (77) overtook TGI Fridays (76) with a 3 percent boost. Denny’s chimed in at 76 and Red Robin fell 9 percentage points to 73.

The ACSI report is based on 5,557 customer surveys collected between June 8, 2016, and May 12, 2017.

This puts quick-serves in a unique position. YouGovUS released a report on the subject, titled “How quick-service restaurants can help America eat better.”

The study found that nearly one in two Americans (45 percent) find it difficult to make healthy eating choices. Meanwhile, 40 percent of the general population believes quick-serves have become healthier over the last five years.

Here were some other findings:

YouGov asked people what was the healthiest menu item at quick-service restaurants. Fifty-two percent picked salad. But only 41 percent of those were millennials. “Given the fact that the younger generation now makes up over a quarter of the U.S. population, and that nearly half of America finds it hard to make healthy eating choices, improving the perception of salads and other menu items could draw more industry revenue,” the study says.

Sixty-seven percent of consumers said diet and exercise were equally important to maintain a healthy lifestyle. This shifted by generation as well. Data showed that 74 percent of Americans aged 55 and over believe a balance is crucial, while only 58 percent of millennials agree. However, millennials are also 12 percent more likely to claim diet is more important.

Fifty-seven percent of adults added that seeing calorie and nutritional information on a menu would impact their choices.

“Many Americans also say that quick-service restaurants should show certain types of nutritional information on their menus—a practice most chains have been doing,” the study says. “Consumers, especially older consumers, want to know the fat, cholesterol, and sodium/sugar content in the food they eat when they eat out.

As for which quick-service brands are shining, the ACSI broke it down.

Chick-fil-A remained the customer satisfaction leader with a score of 87. Panera was second, tied with Papa John’s, at 82. KFC scored a 78.

Behind Papa John’s in the pizza category was Little Caesars (78), Domino’s (78), and Pizza Hut (76).

For sandwiches, Subway (81) and Arby’s (80) followed Panera.

Chipotle stabilized at 79, a 1-percentage point increase from last year. Taco Bell had a 76, while Dunkin’ Donuts (79) remained ahead of Starbucks (77).

Burger King grabbed the burger lead with a 1 percent jump to 77. Wendy’s (76), Jack in the Box (75), and McDonald’s (69) followed.

Casual Dining, Chain Restaurants, Feature