What's Separating Emerging Chains from the Restaurant Pack?

Fishbowl's annual study brings up some key trends.

March 2018 Danny Klein

Now in its sixth year, Fishbowl Analytics’ list of emerging brands has laid down quite a track record, tapping brands like Sweetgreen, which hit a valuation of $1 billion last year, as well as Shake Shack, as concepts on the rise. Danny Meyer’s fast casual, by the way, enjoyed a $2 million day this past quarter.

Fishbowl narrows the list to chains with five to 75 units “that exhibit a strong promise of potential growth in the near future and embrace progressive developments that are innovative and unique.” A past example: health-focused menus. Fishbowl analyst Katharine Dalton told CNBC that specific trait, once a differentiator, is now the price to entry, not something that sets a brand apart. Fishbowl’s study reflects what’s happening industry wide to a degree. What it boils down to is these restaurants have found a center of gravity customers can relate to and still manage to keep their appeal broad. It’s a balance between navigating the tension of standing for something while remaining accessible to a changing demographic.

Fishbowl said this year’s list features restaurants “that not only have caught our attention, but spark interest across various demographics and markets.” Again, finding a sweet spot between being authentic and serving multiple audiences and occasions, and having the operations and infrastructure to remain distinct during growth. At the end of the day, this is the time-tested recipe for expansion.

Fishbowl uses survey analytics to garner nominations from industry experts, food enthusiasts, industry executives, advisers, and thought leaders. It also studies blogs, industry publications, and media mentions. The company then leverages its proprietary social data software to analyze more structured reviews, check-ins, and ratings. With the data, Fishbowl sees how brands position against one another and evaluates growth in consumer enthusiasm over the past two years, using ratings and frequency trends.

Additionally, it leverages the “Fishbowl Social Score” to rank brands’ success in social media on a 1–10 scale. Scores are calculated across multiple social channels based on a sentiment score derived from the mining and analysis of consumer feedback; frequency measures from social activity per location; a growth score determined by recent or imminent unit expansion; and an Enthusiasm Index based on the number of “buzz phrases” (highly charged, positive emotional responses) expressed in collected text.

It’s kind of interesting how many of these chains are limited service (18 versus 12). Also, last year's No. 1—True Food Kitchen—fell to No. 3. The second-ranked brand, bartaco, is full service, however. While of course you have to weigh just how much bigger that side of the industry is, it also speaks to a deeper topic. Were fast casuals quicker (or maybe just more nimble) to meet an evolving millennial generation? One that cares more about the story and what restaurants represent than what they accomplished in the past? On that agile note, it’s also simply far easier for a one-off fast casual to open a specific concept to trend in a market that demands it. That is a risky growth proposition, though, as some of the segment’s darlings from a few years ago are now fighting to restructure in bankruptcy court.

“Many times, consumers discover a brand early in its development and become emotionally invested in its growth. This creates an active sense of ownership that drives their loyalty and increases support on social media," Fishbowl’s chief analytics officer Mike Lukianoff said in a statement.

Cava

Cava, which bought Zoes Kitchen for $300 million in 2018, tops the list.

Either way, full-service chains are discovering—and clearly reacting—to a shift in what matters for today’s guest, which is brand distinctiveness. To put this in perspective, there were only 11 fast-casual chains on last year’s list versus 16 this year (two were classified as quick service). Casual (eight) and polished casual (four) were down from 10 and nine, respectively.

“Growth in the fast-casual space is driven by common themes of locally and sustainably sourced, from the food served to partnerships with neighbors, and using technology to connect and foster a sense of community. It was another exciting year of diversity in concepts making our list, showing that while consumers are responding to unique global flavors and cooking methods, there still remains a large appetite to delight the traditional palates in innovative ways,” Fishbowl said.

Full-service chains can learn from this example, and how fast casual sprung from the consumer gaps in fast food. These two segments have started to influence each other, from food to service, and more. The same is true across the full-service chain lexicon in regards to emerging brands and legacy ones. And it's where a big opportunity lies.

Now, on to the rankings:

Cava
Bartaco (check out Bartaco's plan to stay true to its mission en route to growth)
(Last year's No. 1) True Food Kitchen (Read how True Food Kitchen is plotting a digital future)
Dig Inn
Mendocino Farms
Urban Plates
Lemonade
The Little Beet
Bibibop Asian Grill
Punchbowl Social
Hattie B’s Chicken
Jollibee
The Simple Greek
East Hampton Sandwich Co.
Grabbagreen
The Halal Guys
Homegrown Sandwiches
Wagamama
Kura Revolving Sushi Bar
Super Duper Burgers
Alamo Drafthouse Cinema
Belcampo Meat Co.
Keke’s Breakfast Café
Hook Burger
Mi Cocina Tex Mex
Tupelo Honey
Burger Boss
Dish Society
Village Tavern
Rock and Brews

Here’s a look at how the brands ranked on the aforementioned Fishbowl Social Score.

Cava: 9.8
Bartaco: 9.7
True Food Kitchen: 9.6
Dig Inn: 9.5
Mendocino Farms: 9.4
Urban Plates: 9.3
Lemonade: 9.2
The Little Beet: 9.1
Bibibop Asian Grill: 9
Punch Bowl Social: 8.9
Hattie B’s Hot Chicken: 8.8
Jollibee: 8.7
The Simple Greek: 8.6
East Hampton Sandwich Co. 8.5
Grabbagreen: 8.4
The Halal Guys: 8.3
Homegrown Sandwiches: 8.2
Wagamama: 8.1
Kura Revolving Sushi Bar: 8
Super Duper Burgers: 7.9
Alamo Drafthouse Cinema: 7.8
Belcampo Meat Co: 7.7
Keke’s Breakfast Café: 7.6
Hook Burger: 7.5
Mi Cocina Tex Mex: 7.4
Tupelo Honey: 7.3
Burger Boss: 7.2
Dish Society: 7.1
Village Tavern: 7
Rock and Brews: 6.9

Andrea Behrends

Del Frisco's Bartaco is winning with value.

Let’s break down some of the findings.

There are many ways to identify what market to open a restaurant in. There’s really no blanket strategy. For some chains, like Bennigan’s, Huddle House, and Krystal Burger, a small-market approach is better than a dense-urban one. Sometimes there’s value in being the biggest game in town. Becoming an employer of choice from day one is a sure-fire way to make guarantee your restaurant is a destination. Beyond the cheaper land, more affordable rent, and, at times, quicker return on investment, small markets can provide expanded trade areas. Instead of a few blocks in downtown Chicago, you might have 20 miles to work with in the suburbs. As Paul Mangiamele, Bennigan’s CEO, told FSR earlier in the year, “If I open a Bennigan’s in Manhattan, it’s ho-hum, another restaurant. You open in Monahans, Texas, and it’s the biggest event of the century.”

On the flip side, some trendier concepts might not generate sustained interest.

Here’s how Fishbowl’s emerging list broke down:

California 10 brands, 94 locations
Texas: 11 brands, 78 locations
Florida: Six brands, 49 locations
North Carolina: Five brands, 13 locations
Virginia: Five brands, 13 locations
Arizona: Five brands, 11 locations
Tennessee: Four brands, 10 locations
New York: Four brands, 10 locations
Maryland: Two brands, two locations
Ohio: One brand, one location

There are few things more important than real estate. Just look at Outback and its relocation strategy. Subway, for that matter, which shut down close to 1,000 locations last year. Relocated units, though, enjoyed a sales and traffic boost of 18 and 15 percent, respectively, at the world’s largest restaurant chain last year. Here’s a deep dive into the current state of the real-estate industry for restaurants. The key takeaway: despite the state of vacancy rates and what’s happening in retail, the competition for prime outlets remains fierce. But what a “prime outlet” means for a specific restaurant brand and its target demographic is what really matters.

Reviews resonate

Fishbowl looked at “bigrams,” which are two-word phrases found in any string of text. Since these provide more context than single buzzwords, like “FOOD,” the company used them to provide depth to its consumer sentiment analysis, including the overview of chatter within each segment.

The most common mentions across all 30 emerging brands:

Reviewers LOVE their experience, especially the FOOD.

Customers frequently report that they are FIRST TIME visitors. (This is a really critical note. What’s the supposed golden rule? It takes three great experiences to inspire lifelong loyalty. Can’t get to three without one. A guest is never more willing to share their experience, good or bad, on social or with friends, than after that first visit. Also shows how many diners are exploring new venues instead of sticking to specific brands).

Reviewers are already planning their next trip, they HIGHLY RECOMMEND them, and intend to COME/GO BACK soon, DEFINITELY.

They are often used to offering advice, sharing details of ORDERS and letting future patrons know what the CAN GET.

What matters most to full-serves?

According to Fishbowl’s data, polished-casual diners want menu items that appeal to both taste buds and dietary preferences. They offered up rave reviews for unique options, but were also drawn to traditional comfort food done well. This category included True Food Kitchen, Wagamama, Eureka, and Village Tavern.

Some notes:

Sweet potatoes rose in popularity over 2018 for polished casual and casual brands. The winners: True Food Kitchen and Eureka.

Healthy food remains a huge draw. Gluten-free options are appreciated and inspire strong loyalty from guests who know they can rely on the restaurant.

Overall, True Food Kitchen and Eureka stood out for unique offerings like Ancient Grain Bowls and Edamame Dumplings (True Food Kitchen) and Mac ‘N’ Cheese Balls (Eureka).

True Food Kitchen

Between 2016 and 2018, True Food Kitchen has doubled its footprint, going from 12 restaurants to 25 restaurants.

Happy Hours lured in polished-casual guests. If customers are going to fork up for a sit-down over convenience, they want to spend for atmosphere and social gathering as much as food. In fact, “Happy Hour” was the most frequent mention at 12.8 percent.

What about the casual space?

Top of the list: innovative twists to traditional fare. This makes sense when you consider the average casual-dining customer base. They want food they recognize. But they want food they couldn’t make at home. (They also want value and abundance, but that’s a different conversation).

Happy Hour was also important to this group, taking 10.2 percent of all mentions. At Gene Simmons and Paul Stanley’s Rock & Brews, as well as Tupelo Honey, it was responsible for high ratings and repeat visits.

Tupelo Honey came in as the most-often mentioned brand of the casual group, which also featured Alamo Drafthouse, Dish Society, Keke’s Breakfast Café, Bartaco, Mi Cocina Tex Mex, and Dig Inn.

Rock & Brews clocked No. 2 thanks to its food and drink shutouts.

Del Frisco’s recent acquisition, Bartaco, scored high for pork belly tacos. Kekes for French Toast and Mac ‘n” Cheese.

Compare the segments

Here were the top mentioned full-service buzzwords:

Food: 9,616
Good: 5,241
Great: 5,178
Service: 3,945
Like: 2,999
Tacos: 2,916
Delicious: 2,696
Back: 2,671
Menu: 2,446
Love: 2,313
Restaurant: 2,212
Healthy: 2,190
Bowl: 1,973
Fresh: 1,920
Chicken: 1,823

How did these buzzwords fare in quick service?

Food: 8,950
Good: 5,308
Great: 4,541
Service: 3,031
Like: 4,178
Delicious: 2,784
Back: 2,710
Menu: 1,308
Love: 2,941
Restaurant: 1,497
Healthy: 2,311
Bowl: 2,905
Fresh: 2,785
Chicken: 3,092

This shows us a few things. Not surprisingly, full-serves elicit more conversation around service. Not pictured above, quick-serves had 2,648 mentions of “order.” That was just 1,755 for full-service restaurants. So getting great service is more prevalent at sit-down chains, naturally. Getting an order quickly is more important in limited service.

Delicious, healthy, and free were critical in both. But the menu was discussed more for full-serves and salad was significantly higher for counter-service brands. This fits with the notion that indulgence, or unique innovations on traditional fare (make it worth the extra time and price), are more important to full-service diners. Getting a healthy salad on the go is a snugger proposition in the quick-service world.

Fishbowl

Shine the spotlight

Food: Little Beet had the highest positive food mentions, followed by Dig Inn and True Food Kitchen.
Service: Punch Bowl Social, Lemonade, and Dig Inn led the pack.
Ambiance: Punch Bowl Social, Bartaco, and True Food Kitchen ranked ahead.
Price: Reviwers singled out Bartaco, Bibibop, and Lemonade.
Beverage: Bibibop, Lemonade, and Bartaco earned the highest number of mentions for their beverage offerings.