Total sales are growing 30 percent year-over-year as the steakhouses feel pent-up demand from consumers across the country.
With pandemic and inflationary pressures bearing down, pessimism would appear to be the natural response for buffet operators, but if you ask Gregg Nettleton, president of Ponderosa and Bonanza Steakhouses, you’ll hear a different tune.
He believes buffet restaurants will persevere because of their ability to provide differentiated comfort and value, and recent numbers support his theory. Total sales are up 30 percent year-to-date compared to 2021 and are up 40 percent in the second quarter compared to the same period last year. Families in particular have returned in great frequency, Nettleton says. He estimates that some travel 30-60 minutes for a night out.
“We’re seeing record sales at some of our units, we’re seeing families coming back into the mix. There’s a resurgence and things are looking very positive,” Nettleton says. … We were shuttered in and we couldn’t go anywhere, and I think people were just excited to get back out and socialize. Families have been returning in great frequency, and I think that’s because everyone is welcome here. It’s comfort food, it’s value based, and it’s the same kind of food you grew up eating at your grandparents.”
Ponderosa and Bonanza are owned by FAT Brands, which purchased the steakhouses for $10.5 million in late 2017. At the time, it was the company's first acquisition since Buffalo's Cafe in 2011.
In the early weeks of COVID, back when questions swirled as to how buffet chains would survive, Nettleton made sure leadership connected with every franchisee within the first seven to 10 days. The team provided guidance and continually updated them on the best ways to operate and protect customers and themselves, like offering disposable gloves and switching service utensils every 20-30 minutes.
The steakhouses temporarily transformed into a full-service model in which servers brought in food from the kitchen. The decision increased labor costs, but Nettleton says it was a worthwhile price. Fast forward to summer 2022, there are still some stores operating with this method, but a majority have returned to buffet. Nettleton predicts all units will return to normalized operations in the near future.
“That’s what our guests prefer,” he says. “It’s a better model for us. It helps with the labor, and it allows our employees to focus on the quality of the food instead of worrying about running to and from tables.”
The new issue presented before Ponderosa and Bonanza is historic inflation. To combat rising costs, particularly protein, restaurants have hiked menu prices, but only slightly says Nettleton, who believes value must remain a core value.
“We haven’t taken price to cover all of the inflation around food because we don’t think that is a good move for us strategically,” he says. “We want to bring traffic in, which means you don’t want to put any barriers in front of guests. They’ll be understanding of some increase, but nothing too high.”
Because of the volatile supply chain, availability of menu items has fluctuated, and the steakhouses have had to get creative in response. For example, lack of certain ingredients made it impossible for restaurants to offer their traditional chicken wings. So the brands improvised and created a new flavor profile that resembles the original.
While some customers miss the old version, the substitute is still satisfying the guest base.
“We’ve got to be on top of new recipes,” he says. “We’re always reinventing products. People will tell me that they miss the old wings, but they sure love the new ones, which is really important to us.”
Recent success allows Nettleton to look toward the future after being so focused on the present for the past several years. Discussions with franchisees about expansion have picked back up and several units are in the process of getting remodeled. According to the company's website, ideal locations are between 2,000 to 5,000 square feet, depending on climate, space, configuration, clientele, and economics. Additionally food court or kiosk locations could be as small as 800 to 1,000 square feet. Ponderosa and Bonanza are targeting Midwestern and Southeastern states domestically and a handful of international markets, Egypt, Qatar, Taiwan, and United Arab Emirates.
Although the pandemic is still ongoing, Nettleton says it’s important to strike now.
“You can’t wait until it’s [the pandemic] over before you start,” he says. “It’ll take too long to get running. We’re excited about where we can go moving forward … We’ve positioned ourselves well for the future. There’s more interest coming in, we’ve got customers coming back. We’re even more optimistic now than we were before.”