Metro Diner’s strategy dramatically changed when COVID hit. Co-chairman Hugh Connerty calls it the “Netflix effect.”
People learned they enjoy receiving meals at home without having to venture out, pushing the restaurant to reimagine to-go packaging and perfect its off-premises execution. As a result, sales outside the four walls grew from 7 percent pre-COVID to roughly 30 percent.
“That’s like adding a dozen more tables to the inside of the restaurants,” says Connerty, a longtime restaurateur who founded Hooters, helped develop LongHorn Steakhouse, and became Outback’s first franchisee.
Breakfast took a major hit in the early weeks of the pandemic as customers altered their morning routines and opted for stay-at-home meals. But as restrictions have lifted, the daypart has witnessed quite the recovery. In the three months ending November 2021, according to The NPD Group, online and physical visits to restaurants for breakfast increased by 11 percent, compared to a 10 percent decline in the same period a year ago.
While the roughly 60-unit Metro Diner was thrilled about guests opting into new ordering channels, the additional business had a twofold effect. There was incremental revenue, but also logistical problems for a kitchen designed to serve a certain number of people.
To offset the dramatic increase in off-premises orders, Connerty decided it was time to beef up operations in the form of to-go-only kitchens, with the first iteration debuting in Charlotte, North Carolina several weeks ago.
Customers can order breakfast, lunch, and brunch items (dinner hours will be added in the future) through Metro Diner’s website or third-party delivery apps like Grubhub, DoorDash, and Uber Eats. The new outlet, open from 7 a.m. to 2:30 p.m., supplements operations of three existing full-service restaurants in the Charlotte metro area. During its first weeks in operation, the off-premises-only store brought in upward of $2,000 on both Saturday and Sunday.
The location is a former commercial kitchen renovated to meet the needs of Metro Diner. With certain equipment and infrastructure in place, Connerty estimates it cost less than $250,000 to get the unit up and running. All future to-go units will be no bigger than 1,200 square feet.
“It has a much lower overhead than the retail locations, and it’s far more affordable,” he says. “The to-go locations cost under $300,000, and if we can generate at least $1 million in revenue, it’s obviously well worth it.”
Metro Diner is the latest full-service chain to create stores that lean more into takeout and delivery. Other examples include Buffalo Wild Wings, P.F. Chang’s, TGI Fridays, Hooters, Friendly’s, Famous Dave’s, and Bennigan’s.
Although restaurants’ relationships with third-party delivery companies have been tenuous during the pandemic, Connerty says the platforms have done well to promote brands, especially to younger customers that use the websites multiple times per week. Even with the fees, he believes the partnerships are beneficial and serve as an incremental marketing tool.
Metro Diner listened to complaints associated with timeliness, quality, and overall experience, and all were taken into consideration as the chain fine-tuned its off-premises operations.
“When that driver hands you a bag from Metro Diner, we want it to look fantastic,” he says. “It’s sealed, it has handles, and there’s a clean handoff. And unless the driver turns that bag upside down in the car, it’ll all be packaged perfectly.”
The brand addressed the portability of its breakfast staples, as well.
“In general, do I think the to-go food experience is as good as the dine-in experience?” he asks. “Absolutely not, but that statement can be made about any restaurant. So what we’ve done is adjust materials to make sure things like eggs aren’t all over the place and that everything works right. I personally test these things all the time by ordering here at the office just to see how it arrives.”
As new units are being built, Metro Diner is focusing on developing an app and loyalty program, which should facilitate targeted messaging toward consumers, along with higher frequency and average check.
The company is also doing its best to maintain a differentiated value proposition amid record-high inflation.
“We think Metro offers a great price point,” he says. “We know everyone throughout the supply chain is having issues, but we just don’t think now is the time to raise prices like a lot of people are. We’re not a public company and our view is sometimes you make more money some years and sometimes you make less. We want to keep the price point where it’s at, and we told our partners that we’re going to make a little less money right now, and that’s okay.”
A second off-premises-only unit is planned for the Tampa, Florida, to assist the busiest kitchen in the entire system, which Connerty can only describe as a “three-ring circus.” If the initial outlets prove successful, more to-go kitchens will be introduced in other established markets, like Delaware, Alabama, Indianapolis, and Jacksonville, Florida.
“There are still a lot of people who don’t want to go out to eat and would rather stay home,” he says. “It’s never been easier to do that.”