Considering the tough winter restaurants are about to face, the Toasted Yolk is the subject of envy for a variety of reasons.
Nearly nine months into a global pandemic, the Texas-based breakfast chain is up in sales versus last year, a position CEO Chris Milton calls a “pretty neat place to be.” To put in perspective how true a statement that is, comp sales across the industry slipped 10.3 percent in November and traffic dropped 16.3 percent, according to Black Box Intelligence. Additionally, a survey from the National Restaurant Association showed that 87 percent of full-service restaurants are seeing a 36 percent decrease in sales on average.
How did the 14-unit Toasted Yolk find itself in this spot? It started by quickly moving past the initial shock of COVID in March. Milton acknowledges that when lockdowns began, there were worries, but the company pivoted to off-premises-only mode. Sales outside the four walls mixed 6 percent prior to the pandemic, but that channel has more than tripled and remained at 20 percent as dine-in guests returned.
“We just made [off-premises] very user friendly,” Milton says. “We made it where, especially if it wasn’t through a delivery service, that if somebody called to place an order that you made it where they didn’t have to get out of the car—made it really simple. … I think what helped us is where our competitors closed down. We were that restaurant that brought normalcy back to lives during those early months.”
It also helps the City of Houston—the area where most stores are positioned—averages only 18 days a year in which temperatures are 32 degrees or lower. In fact, right now, the city is running between highs of 60 to 70 degrees. The balmy weather allows for continued outdoor dining, even into January and February.
That’s not to say every single star has aligned for Toasted Yolk. Milton says the breakfast daypart, 7 a.m. to 9 a.m., has definitely been impacted, obviously more so when the crisis started compared to now with some going back to the office. While the mornings haven’t returned to 100 percent, the CEO notes the chain is recouping that loss by acting as a destination.
“You don’t have as many people going out, going to work at 8 o’clock, or doing the commute. But what we’ve become is with not as many people going into the office, we’ve become a meeting place for people to meet and conduct business,” Milton says. “So our hours being that we close at 3 o’clock in the afternoon, I think they’re a lot more suited for that.”
Milton says that six to eight weeks ago, the brand was “absolutely booming,” which was a much-needed burst in hindsight as the rise in COVID cases have pressured sales recently. Even though no additional lockdowns have been ordered in Texas, Milton explains that there’s a group of consumers that aren’t going to eat out during this period, or at least on-premises.
Texas has proven to be one of the most restaurant-friendly states in the country during COVID times. It allowed 25 percent capacity in late April, and about a month later, the max increased to 50 percent. In mid-June, capacity rose to 75 percent, but that quickly went back to 50 percent after a spike in COVID. However, the capacity returned to 75 percent by mid-September.
Milton believes there won’t be another shutdown in Texas like what’s been seen in places like California, Illinois, Minnesota, and other states. If anything, he says it would just be another shift to 50 percent—a measure that was recently instituted in North Texas, which includes Dallas.
If more restrictions do come, Milton says restaurants are prepared to move tables outside where operators have innovated by enclosing patios in wraps and monitoring temperatures with heating or cooling agents.
“I think we’re fortunate being in Texas that our governor has made a stand that they’re not going to do any more lockdowns,” Milton says. “I think it’s always in the back of your mind. I think what had happened the first time, you never thought in your lifetime that you would ever see something like that. All you can do is hope for the best, and then be prepared to react if need be.”
In terms of growth and development, Milton says the Toasted Yolk was poised for a banner year in 2020 prior to the COVID outbreak. Still, two restaurants managed to open in July. Additionally, the brand announced the signing of new leases for League City and Bellaire, Texas. The 6,110-square-foot League City unit is scheduled to open this month while the 4,100-square-foot Bellaire store will debut in March.
The CEO says the Toasted Yolk is close to securing agreements for units outside of Texas, which would be a first for the chain. The only hiccup right now is that lending is tough for restaurants, so the brand is seeking well-capitalized partners. The company is also using its learnings from the pandemic to ensure that stores are arranged to meet the age of convenience.
“We’ve put in some of our locations, pickup areas. Where that [customers] used to come to the bar, they now have a dedicated area for to-go orders, which I think will be part of our concept going forward,” Milton says. “We used to do some concepts—if it was in the right area—that didn’t have patio space. We just wouldn’t do that going forward, making sure that patio is a big part of the overall function of the restaurant.”
It’s difficult for any operator to predict the coming months, but given where the Toasted Yolk is positioned just before the winter season, Milton feels confident in how the company will fare in a post-COVID world.
The CEO says the efforts of the chain through the pandemic have earned the loyalty of both operators and customers.
“We have some real advocates of our brand,” Milton says. “And I think that this segment, although there’s some out there that are struggling, we’re fortunate to be in a segment that really has a lot of popularity right now.”