The Lost Cajun
Come 2015, The Lost Cajun started franchising, and much of its early connections were organic. Founder Raymond Griffin didn’t advertise and found himself linking up with admirers of the brand as much as opportunists.
There was a time when 100 units was a dream target. Then the pandemic mixed in. On March 21, 2021, The Lost Cajun declared bankruptcy in in the U.S. Bankruptcy Court for the District of Colorado. It emerged on December 7, after shedding a handful of stores across 2020 and 2021.
Now, success stories are beginning to form. A Canon City, Colorado, opening went gangbusters out of the gates and earned more than $1 million in sales through early February.
“Maybe we’ll be 50 [units],” said Griffin, referencing the 100-unit goal. “Maybe we’ll be 70. But at my age, all I want to do now is have a handful of successful owners, a bunch of happy employees, and provide food that nobody else provides except for me. And you know what, there’s a lot to be said for that.”
The California Pizza Kitchen
California Pizza Kitchen is familiar with COVID’s impact as much as anyone. Dine-in sales dropped 77 percent in the final week of March 2020, and the restaurant shut down nearly 50 stores that couldn’t offer off-premises.
Four months later, CPK was forced into bankruptcy, not only because of systemwide COVID shutdowns, but also due to the growing competition of fast casuals, the limitations of malls, and the acceleration of third-party delivery. The chain ultimately decided to reduce its roughly $400 million debt by more than half and remove near-term maturities. In 2021, sales clawed back to pre-COVID performance levels. Now the brand is returning to what it set out to do when development executive Giorgio Minardi—solidifying franchise partnerships and kickstarting U.S. expansion.
The pizza chain leverages three main methods of growth—international franchises, company-run locations, and contracts with nontraditional locations in the U.S. like airports, casinos, and stadiums. With the new domestic franchise program, CPK will work to fill the rest of the country; the brand doesn’t operate in 23 states, which Minardi describes as “tremendous” white space.
TGI Fridays finds itself still in the throes of a turnaround effort, which dates back to the hiring of CEO Ray Blanchette in October 2018. About a year later, the chain announced its intentions to go public with special purpose acquisition company Allegro Merger Corp. as part of a $380 million deal. When COVID hit, sales dropped roughly 80 percent. Because of those challenges, the merger agreement was canceled in April 2020. Since the pandemic began, TGI Fridays has permanently shut down close to 150 stores systemwide.
But the brand has since turned positive. In 2021, same-store sales rose 2.4 percent against two years ago and the chain earned $73.2 million in average monthly volume in 2021, up from $50.8 million in 2020 and $72.5 million in 2019.
To compete with an increasingly off-premises world, TGI Friday in January unveiled Fridays on the Fly, a 2,500-square-foot delivery and to-go focused concept geared at penetrating markets inside and outside the U.S. The company estimates each location could earn $2 million in AUV and $300,000 in annualized EBITDA, with a $700,000 investment and payback period of 2.3 years. TGI Fridays U.S. off-premises mix reached 30.6 percent in 2021, compared to 37.8 percent in 2020 and 9.8 percent prior to the pandemic. Delivery accounted for 17 to 20 percent of sales in 2021, an increase from 5 to 6 percent two years ago.
Legal Sea Foods
At the end of 2020, PPX Hospitality Brands, parent of Smith & Wollensky steakhouses and Strega Italiano, acquired Legal Sea Foods and its quality control center for an undisclosed amount from Roger Berkowitz, son of Legal founder George Berkowitz. That year, Legal had 33 restaurants, but six closed by December due to COVID. The chain is now down to 23 units across Massachusetts, New Jersey, and Pennsylvania.
Since PPX’s tenure began, one of its primary goals has been to maintain menu quality, add innovation, and bring more species into restaurants. To kickstart this strategy, the company transformed Legal Test Kitchen—a spinoff concept that closed permanently during COVID—into a section of Legal’s menu. Legal’s typical menu received upgrades, as well, such as the bigger-sized Half-Pound Main Lobster Roll, which Chief Culinary Officer Matt King calls the “biggest and best lobster roll you’ll find anywhere.
The updated menu is no longer restricted to the four walls of a Legal restaurant either. In 2021, PPX opened the seafood concept as a ghost kitchen under the roof of two Smith & Wollensky stores in Columbus, Ohio, and Chicago. The menu was narrowed to the popular classics to ensure execution, including New England Clam Chowder, the Half-Pound Main Lobster Roll, Crispy Calamari, Blackened Raw Tuna Tataki, and Fish Tacos.
Back from the Brink
COVID-19 reset the restaurant landscape, causing potentially 100,000 closures across the sector.
The impact reached some of the biggest casual-dining chains in America, with a number of brands declaring bankruptcy or warning the action may come soon. In response, underperforming restaurants were shed, shifts to takeout/delivery and off-premises were made, and growth goals were redefined.
The pandemic accelerated all of these adjustments, and that extra push put certain brands back on the path of financial success and expansion opportunities. Here are 12 full-service brands who have recently fallen, but have come back strong in recent months.
Applebee’s domestic same-store sales dropped 7.9 percent in Q1 2017, and hadn’t seen positive growth since Q2 2015. The brand said its declines in traffic and comps were larger than those experienced in the overall casual-dining segment due to “previously implemented tactical initiatives that did not generate desired results” and “inconsistent quality of operations across the Applebee’s system.”
At that time, the brand had 1,850 U.S. restaurants, and leadership decided to slice roughly 300 underperforming locations out of the footprint. That long journey concluded in 2021 when Applebee’s shuttered 25 domestic units, its lowest total in five years. That left it with a tighter, more efficient 1,578 restaurants nationwide.
Unlike 2017, tactical initiatives are now working. Same-store sales increased 6.2 percent in 2021 compared to 2019, and average weekly sales reached $50,500. Both represented Applebee’s best performance under Dine Brands, which formed in 2007 when IHOP Corporation bought it.
Dave and Buster’s
Among the industry’s publicly traded chains, few dropped as deep into the pandemic hole as Dave & Buster’s. Comparable sales plunged 87 percent out of the gate as the brand laid off more than 1,300 people and cautioned a bankruptcy could be near if a deal wasn’t struck with lenders.
But as restrictions relented and consumer confidence increased, the eatertainment chain has taken full advantage of pent-up demand. With COVID receding in February and March, comps rose 5.4 percent versus 2019 in the first eight weeks of the first quarter. Walk-in business is up 9.1 percent quarter-to-date versus pre-pandemic times and special events business is down 42 percent, but that’s a stark improvement from the 58 percent drop it witnessed in Q4.
In April, Dave & Buster’s announced it was buying Main Event for $835 million. Chris Morris, the CEO of Main Event, will serve as lead executive of the combined company.
Smokey Bones was originally founded by Darden Restaurants in September 2009. It opened nine restaurants in eight different markets throughout Florida, the Midwest, and Northeast before deciding to try its hand at national expansion. It expanded to 129 locations but struggled to generate consistent results. By 2007, Darden closed 56 units and put the rest up for sale. Sun Capital Partners scooped in and took over for about $80 million.
More than a decade later, the chain hired James O’Reilly, who was tasked with boosting revenue, reinvigorating the brand, energizing the menu, and appealing to a wider audience.
The most immediate impact was the nationwide launch of virtual brands The Wing Experience and The Burger Experience in all of Smokey Bones’ brick-and-mortar restaurants. Now, the casual-dining chain is in the process of adding a fully equipped, all-digital drive-thru lane to a restaurant in Bowling Green, Kentucky. This will look, and operate, like a high-tech drive-thru you’d see on a quick-service restaurant, complete with digital order confirmation, high-quality audio, dedicated staff, and menus tailored for speed, including the chain’s virtual concepts in tangible form.
SPB Hospitality’s biggest chain, Logan’s Roadhouse, experienced 45 consecutive weeks above 2019 sales last year, and experienced 35 percent growth over 2020 and a 20 percent increase compared to 2019.
Additionally, the 83-unit Old Chicago is aiming for five openings in 2022, comprising a mixture of franchise and company-run locations. SPB also made a splash in the M&A market in 2021 with its $220 million purchase of fine-dining concept J. Alexander’s. The company will remain active in the M&A space and seek category-leading brands with strong consumer affinity and good economics, says CEO Jim Mazany.
The success came a year after CraftWorks—the former and now defunct parent of Logan’s, Old Chicago and several other brands—declared bankruptcy and shuttered 37 underperforming locations. The court proceedings coincided with the start of the COVID pandemic, which resulted in all 261 company-run stores closing and thousands of employees being let go. Then in May 2020, Fortress Investment Group bought the restaurants for $93 million and formed SPB Hospitality. A few months later, Mazany was appointed to lead the refreshed group.
Friendly’s, a chain founded nearly 90 years ago, felt the full impact of COVID.
After losing money and repeatedly borrowing under its credit facilities, the concept declared bankruptcy in November 2020 despite efforts to reduce cash burn and restore profitability. For $2 million, the roughly 130-unit chain was placed into the hands of Amici Partners Group, which is affiliated with Smoothie Factory and RedBrick Pizza parent BRIX Holdings.
The turnaround effort, spearheaded by CEO Craig Erlich, involves multiple rounds of innovation, most notably a new store design and significant menu updates. In February, the chain opened a fast-casual spinoff called Friendly’s Cafe in Westfield, Massachusetts. The 2,700-square-foot restaurant has a designated to-go area inside for pickup orders and keeps four parking spots for curbside pickup. The dining room seats 45 guests. In terms of menu, twelve items were added, including the $100,000 Cobb Salad, Jammed-Up Burger, Cheese Skirt Burger, Tex-Mex Alfredo Taco Pasta, and Aloha Stir Fry Chicken. The chain, known for its ice cream, also added a Barking Pretzel flavor.
Xperience Restaurant Group
For Xperience Restaurant Group, 2021 was the company’s most successful year on record, only a few years removed from financial turmoil.
XRG was formed in 2018 after Z Capital spent $47 million to acquire Real Mex Restaurants out of bankruptcy. The company—comprising casual-dining brands like El Torito, Chevys Fresh Mex, Acapulco, Sol Cocina, and Solita Tacos & Margaritas—saw sales plummet as much as 85 percent in the early days of COVID. Matters improved as the group recaptured pre-pandemic numbers. And by early February 2021, outdoor dining and other options had pushed the system to only single-digit decreases compared to the previous year.
One of its most significant projects is a 13,000-square-foot Chevys Fresh Mex flagship restaurant on Las Vegas Boulevard, set to open this summer. The store will be the company’s largest Chevys location with seating for over 400 guests and featuring floor-to-ceiling windows with views of the Las Vegas Strip, T-Mobile Arena and Park MGM. The restaurant will feature a Chevys Famous Frozen Margarita Wall with a broad range of flavors that can be taken to-go, as well as a Piñata Private Party Space featuring Olé, the brand’s playful piñata mascot.
Bennigan’s, created by legendary restaurateur Norman Brinker, was barely left with a pulse in 2008 after a Chapter 7 bankruptcy erased all 150 of Bennigan’s corporate restaurants. The remaining 138 franchises whittled down shortly after, with 70 remaining during proceedings. Now there are 11 stores domestically and and 15 internationally, with six more in development.
Paul Mangiamele, a former CEO of Salsarita’s, was originally brought on to lead a turnaround, but eventually purchased the chain with his wife in 2015. The brand falls under Legendary Restaurant Brands, which also owns fast-casual spinoff Bennigan’s On The Fly, Bennigan’s On The Fly Virtual Kitchens, and Steak & Ale.
In October, the CEO told FSR that restaurants reduced operating hours and moved to offset inflationary and labor challenges, but same-store sales were positive against 2019.
In the fall, Bennigan’s announced a deal with REEF Neighborhood Kitchens, one of the fastest-growing ghost kitchen facilitators in the foodservice space.
“Since our brands were pioneers of casual dining in the first place [Bennigan’s was founded in 1976 and Steak & Ale in 1966], the mission was to try to get them into as many markets, both domestically and internationally, as possible,” Mangiamele says. “But now, there have been so many roadblocks in front of us in terms of coronavirus and dealing with this going on almost two years now … So what better way to still explode the brand awareness in getting product out, not only domestically but internationally as well, then to partner with a company like REEF?”
Golden Corral CEO Lance Trenary remembered seeing headlines about his brand early into the pandemic, like “zombie company” and “the buffet is dead as we know it.”
Long after those initial weeks, the journey has remained tenuous, with immense pressure from the Delta and Omicron variants. Golden Corral overindexes with families and seniors, and those are typically the most reluctant groups. The declines have been substantial, the CEO acknowledges. The chain’s footprint has slimmed by nearly 100 restaurants since the end of 2019, when it had 483 stores. Instead of feeding into the negativity, Golden Corral used the attention as a rallying cry, and developed a saying: “The comeback is greater than the setback.”
Last February, roughly 250 restaurants were open for buffet, weekly AUV averaged $65,000–$70,000, and comps were declining about 25 percent compared to 2019. A year later, roughly 360 buffets were open, average weekly AUV exceeded $80,000, and comp sales were flat compared to 2019. Another 30 stores are scheduled to reopen before the year is over, depending on lease negotiations with landlords.