Anita Adams was appointed CEO of Black Bear Diner in January 2020, weeks before the U.S. felt the weight of the COVID pandemic. Following lockdowns was a paring of the industry. Thousands of restaurants closed their doors.
At the time of Adams’ promotion, Black Bear Diner stood at 138 locations and was on the cusp of celebrating its 25th anniversary. Unlike many of its peers, the brand managed to open a net of five restaurants in 2020. It followed with 13 more across the next three years to put it at 156 nationwide.
And Black Bear Diner is far from done. It has a total addressable market of 800 stores coast to coast, according to the CEO.
“We’ve weathered the pandemic,” said Adams, presenting at the ICR Conference earlier in January. “We exited with all but one of our diners coming out of the pandemic. We’re very proud about that. And then now we are at the juncture where we’ve reignited our growth and we’re very bullish on the future.”
Although Black Bear Diner navigated well through the pandemic, it’s happy to have customers back in dining rooms because of how much effort is put into the sit-down experience. That starts with the menu, which is all-American fare and large portion sizes. Those items are offered across three dayparts, with restaurants running from 6 a.m. to 10 p.m. Lunch accounts for 38 percent of sales and has an average check of $16.36. Breakfast mixes 37 percent and comes with an average check of $16.68. For both of these dayparts, the most popular item is Bear’s Choice, which provides two eggs and a diner’s choice of protein (bacon, sausage, or hickory smoked ham steak) and entrée (pancakes, waffles, biscuits and gravy, or French toast). As for dinner, that mixes 25 percent and has an average check of $16.54. The best-selling dish during this period is the Chicken Fried Steak Dinner.
“So the value proposition, we believe we absolutely deliver across that spectrum and it’s larger than just the check,” Adams said. “It’s that experience. It’s the food offering, the hospitality, and really creating a memorable experience. And so Black Bear Diner is very well-positioned to do all of that, and particularly in this environment. We think we’re exactly where we need to be. So differentiated, diverse guest base. We really are multigenerational. We cross a broad household income span as well.”
Stores are cabin-themed and feature carved bear totems, really bringing home a natural, camping vibe. Of the 156 locations, 91 are franchised, but each unit keeps a unique touch. Some locations are rural-based, others are in suburbia or large DMAs like Houston. Black Bear Diner has also proven it can work in a variety of footprints. The chain is big on second-generation opportunities, endcaps, freestanding spots, and even travel centers. And these units are bringing in a lot of volume. In 2019, 30 diners earned more than $3 million in annual sales; that figure rose to nearly 55 in 2023.
To address inflationary construction costs, Black Bear Dinner launched a slimmer 4,600-square-foot prototype that preserves dining room space and maintains the same sales volume. Build-out costs are around $1.5 million to $1.7 million, which includes pre-opening and net of TI from landlords.
The franchised network is made up of 33 partners, and about half of them own more than one store. The top eight franchisees represent 16 percent of the footprint.
“It’s not just one or two franchisees out there growing,” Adams said. “We actually have a healthy group, and all of those groups that have been opening diners these last couple of years were opening pre-pandemic. Obviously it was a difficult time, but as we recovered, they were equally as excited to jump back in.”
Black Bear Diner earned $435 million in systemwide sales last year, an increase of $26 million compared to 2022. Of that, corporately run outlets represented $193 million. Corporate AUV is $2.8 million, an increase from $2.5 million before the COVID pandemic. A growing portion of that is coming from off-premises sales. The chain rolled out third-party delivery via Olo in the fall of 2018, but admittedly, Adams said the chain was conflicted on the move due to its emphasis on the four-wall experience. As a result, Black Bear Diner was passive about it and the off-premises channel only mixed 7 percent. COVID forced the restaurant’s hand, however. Sales outside the four walls peaked at north of 20 percent, and has since settled to 15 percent.
The company now takes takeout and delivery quite seriously. Inside the restaurant, Black Bear Diner made modifications to its back-of-house lines, staging, and packaging. It also introduced a pickup window inside its lobbies to ease congestion.
“We have, like I said, incredible food,” Adams said. “And so guests are choosing to enjoy that and the comforts of their home. We believe it’s an incremental guest. And so we’re going to continue to market those folks and hold on to that.”
The company was founded in 1995 in Mt. Shasta, California, by Bruce Dean and Bob Manley. The first franchised diner opened in 2002. Four years later, the 30th restaurant opened and sales exceeded $50 million. In 2016, the brand received its first private equity investment from GreyLion (called PWP Growth Equity back then). The years afterward have been about showing the industry that Black Bear Diner is capable of expanding eastward. Since that investment, the chain has grown from eight to 13 states—Texas, Oklahoma, Nebraska, Missouri, and Iowa being the new ones.
Texas is the major target. There are 19 restaurants in the state, 16 of them company-owned. The chain is posting 30-plus percent cash-on-cash returns in the Lone Star State via ground-up designs. And they’re popping up all over the state. Nine are in the Houston metro area and another three are in Dallas. Another cluster is in the Rio Grande Valley area near the U.S.-Mexico border.
In 2024, Black Bear Diner will open 14 stores—nine franchises and five corporate locations. This includes five company-owned stores in Texas (San Antonio, Dallas, Houston, and Rio Grande Valley). Another five restaurants will open in the state in early 2025. The brand believes there’s room for 50-plus diners in Texas.
Outside of that market, two new franchise partners will enter the fold. LVP Foodservice will open four locations in Kansas, Arizona, Nevada, and Colorado, and Gursavri Group will open an Arizona-based unit. The operators’ restaurants will incorporate new design enhancements for off-premises dining and will be a mixture of conversions and ground-up builds.
“This is an incredibly special brand,” Adams said. “It has all the reasons to win and really just has a very bright future. A lot of growth opportunity. I think a very low-risk growth opportunity.”