The COVID pandemic has undoubtedly placed a significant burden on the restaurant industry, especially the full-service segment. Visits to FSRs were down 47 percent in the April, May, and June quarter, according to The NPD Group.
With dining rooms shut down for several weeks, operators were forced to pivot to off-premises, sometimes in creative fashion. But with COVID numbers continuing to rise, the battle is far from over. However, that doesn’t mean the casual-dining industry is without hope. Here’s a list of 12 mid-sized brands that are rising to the occasion in the face of an unprecedented environment.
Pre-COVID, the chain’s off-premises strategy involved actively looking for real estate with off-premises potential. It started with the brand’s small prototype design, which was introduced in 2019. The initiative carried into the pandemic, helping the BBQ chain quickly roll out curbside pickup and a contactless payment option. At higher volume locations, restaurants constructed makeshift drive-thrus with cones and signage. The leverage of takeout, curbside, and third-party delivery resulted in a 106 percent increase in to-go sales at corporate units. The brand also worked with a multi-unit franchisee to open a ghost kitchen in downtown Chicago. Al Hank, senior vice president of operations, says, “When you look in comparison to other brands and where we were at as far as the communication of these various initiatives, we were well-equipped to deploy very rapidly.” The brand's same-store sales dropped just 7.4 percent in July.
In 2018, Bareburger owned about 14 percent of its digital orders, while third parties controlled the remaining 86 percent. The brand then worked with Lunchbox, a digital solution company, to fix the issue. Web, app, and catering orders were placed under one roof, which simplified the digital experience. Once the foundation was established, the next step was marketing to those consumers and educating them about why it’s better to order first party as opposed to third party. Digital ownership grew to 34 percent in 2019. Fast forward a year later, and Bareburger now controls the majority of its digital transactions at 51 percent—a key milestone given third-party fees and the oncoming pandemic. The chain even worked with Lunchbox to build curbside pickup in basically under eight hours, further elevating its digital presence.
When COVID hit, the relationship between corporate and franchisees became vital as the breakfast chain is comprised of single-unit and multi-unit operators running 43 restaurants. Discussions ramped up to five to six days per week. The initial focus was protecting the health and safety of customers and employees, with an underlying message of “we’re all in this together.” As the Paycheck Protection Program came into view, the company spent more than a half-dozen calls solely on helping everyone understand the program. The advice worked as 100 percent of franchisees received loans. In addition, the brand has offered advice and operational support around curbside pickup and contactless ordering and payment. Eggs Up average weekly off-premises sales typically mixed in the 4-5 percent range. However, thanks to guidance from leadership, the channel grew seven to eight times as high.
On June 12, Earl Enterprises—parent of Planet Hollywood, Buca di Beppo, Bertucci’s, Earl of Sandwich, and Chicken Guy!—announced it finalized the $30 million purchase of the two Italian brands, which declared bankruptcy in April. With the purchase, the company is bringing back more than 4,000 employees. Robert Earl, the new owner, says the restaurants are still achieving good sales during the pandemic on a to-go, delivery, and curbside pickup basis. Some upgrades may include changes to the menu, uniforms, music, flatware, and upholstery. The restauranteur noted that his company is “making sure that every aspect of [the strategy] will rekindle all the great memories that people had of the brand.” The first phase of the strategic plan is to restore Brio and Bravo to “their old glory” and their “heyday of what the product represented.” Then the company will move toward “more revolutionary things.”
Even though operations shifted, owner Daniel DeLeon says the company’s main goal was to maintain the status quo. One part of that objective meant no changes to the menu. DeLeon explains, “We didn’t want to eliminate someone’s favorite item, especially during this time … We wanted to maintain the system for our guests.” The brand has maintained a roughly 100 percent increase in off-premises sales compared to pre-COVID figures. However, Grumpy’s has no plans to delve into the third-party delivery market. DeLeon says the business is doing well, and the last thing the company wants is to be inundated with delivery orders and have customers waiting inside the restaurant. The brand has plans to expand for the first time in its 21-year history. Grumpy’s Restaurant announced that its second location will officially open on October 5 in Middleburg, Florida. This will be the restaurant’s first franchise location, operated by local owner Dell Hoard.
Before COVID, off-premises represented about 12 to 13 percent of revenue, and third-party delivery was about one-third of that channel. In the weeks following their pivot to off-premises only, delivery and to-go business tripled, and the company reached 45 percent of previous sales even before dining rooms reopened. Metro Diner’s loyalty customer base grew, as well. In December, the brand had around 35,000 customer email addresses in its database, but by March, that grew to 180,000. A prototype in Orlando is currently being constructed to address throughput for to-go and third-party delivery business. This includes changes to the equipment, structure of the building, and make line. The store will be staged in a manner that’s convenient for customers grabbing takeout and delivery drivers picking up orders.
Craftworks Holdings, parent of Logan’s Roadhouse and Old Chicago, declared bankruptcy in March on behalf of its 261 company-run units, and saw its proceedings hampered by the COVID pandemic. In late May, a federal court approved Fortress Investment Group's $93 million offer to buy the brands. Now the chains are run by SPB Hospitality, which brought back 194 of the 261 company-owned restaurants. When the federal court approved the $93 million deal, around 150 units were expected to return. Going into reopening, the team set a goal to double off-premises volume, and the restaurants have exceeded expectations. Old Chicago has typically seen off-premises mix 15 percent, but the channel grew to 35 to 40 percent. Logan’s has historically hovered around 10 percent, but off-premises increased to north of 25 percent. Those figures have lowered somewhat with dining rooms reopening, but they’re still above the pre-COVID comparison.
In the midst of reopening dining rooms and rehiring employees, Smokey Bones also turned its attention toward the future of the industry by opening its first ghost kitchen in Chicago in May. The ghost kitchen offers items not available at traditional stores, including a wedge salad and Idaho Burnt Ends, or potato ends topped with cheddar jack cheese, bacon, chipotle mayo, sweet barbecue glaze, and green onions. The opening of the ghost kitchen coincided with the launch of two delivery-only brands—the Wing Experience and the Burger Experience. They are housed in all restaurants across the country and are offered through a partnership with Uber Eats. The Burger Experience features a variety of premium half pound burger options, while the Wing Experience features two styles of wings: Signature Smoked Jumbo Wings and Jumbo Breaded Wings.
Last summer, two franchisees in North Carolina filed bankruptcy and some units shut down. While not ideal, CEO Robert Maynard says the company learned an enormous amount from the setback. Even before the bankruptcies, the restaurant halted franchising and took time to “button up” its training system, franchisee selection, and onboarding process. So even though the impact of COVID was unexpected, Famous Toastery entered the pandemic with newfound agility. The CEO explains, “You just had to face the facts of where things were. Casual-dining, family-dining got smashed. … You really had to do what you thought was best for your brand.” The biggest adjustment was switching to online ordering in four days. Since then, the company restarted its franchising program during the crisis and has received a lot of interest. Three stores are scheduled to open before the end of 2020.
Lawry’s is looking at the long view of recovery when it comes to the unprecedented crisis. Like every restaurant, Lawry’s pivoted to off-premises, which was not a major sales channel for the brand prior to COVID. Takeout and curbside were done sporadically, mostly just for holidays. However, teams quickly responded and pieced together standard operating procedures. Within the dining rooms, the enjoyable parts of the experience—the server, carver, silver cart, and spinning salad bowl—are still present, but just farther away. At each location, silverware is rolled in napkins and dishes and glassware are brought to the table after customers are seated. Condiments are provided in single-serving ramekins. Menus are available on mobile devices or through single-use paper versions. CEO Ryan Wilson says “the dining room feels different, but fortunately guests generally speaking are very receptive to the changes, and they understand the changes.”
For O’Charley’s, the answer to COVID was simple—embrace the challenge. The 160-unit chain started morning calls seven days a week in which leadership discussed ways to adapt and react to changes. O’Charley’s was prepared for off-premises with the partnership of online ordering platform Olo. The brand pared down its menu and reduced staff to roughly 4,400 to properly execute off-premise only. The maneuvers proved successful as off-premises grew five times what it was pre-COVID. In addition, O’Charley’s built its workforce up to 11,600 by the end of June. Beyond operations and sales, the restaurant launched a “Hometown Heroes” initiative to support healthcare workers and first responders. The O’Charley’s food trailer traveled directly to hospitals and police and fire stations to serve free meals. The company also partnered with Second Harvest Food Bank to help families and recently began the O’Charley’s Songwriters Café fundraiser series to benefit the Folded Flag Foundation, a nonprofit that benefits military families.
Between the Paycheck Protection Program and an increase in off-premises sales, the brand began to see signs of life after the early weeks of COVID. After garnering 30 percent of pre-COVID volume at corporate stores in March, sales increased to about 55 percent in May. In July, the restaurant reached 85 percent of normal sales. With the exception of two weeks, the brand saw double-digit increases week-over-week, including the first week of July. The Greene Turtle reopened all 15 company-run stores, with sales breaking down to 60 percent dine-in and 40 percent off-premises. To-go sales tripled during the pandemic, and the company has managed to maintain that level as dining rooms reopened. Four franchised units closed permanently during the pandemic. However, the CEO says that in the Maryland market, franchisees have seen an equivalent—if not better—resurgence. Some franchises are beating pre-COVID levels year-over-year.