When COVID-19 interrupted operations in March 2020, restaurants nationwide were left with many unanswered questions.
During that stressful time, several brands faced obstacles head-on, and leveraged a variety of innovation, whether it was virtual brands, makeshift drive-thrus, ghost kitchens, or rebranding stores.
A year later, chains that pivoted are being rewarded for their perseverance. Sales are increasing, vaccines are on the rise, and even California, arguably the most restrictive state since the pandemic began, is aiming to fully open its economy by the summer.
Here are 13 small and mid-sized chains positioned to prosper because of tools and initiatives they put in place throughout the crisis.
Agave & Rye, known for its double-shelled crunchy corn and soft flour Epic Tacos, transformed its offerings into portable items that could survive a trip home. Cofounder Yavonne Sarber says Agave & Rye maniacally focused on properly packaging, sealing, and tagging each product. She estimated in early February that delivery grew about 20 percent year-over-year.
Now with dine-in available, Sarber says restaurants typically have a waiting list each night as rooms fill to state-mandated capacities. To ensure safety, the brand hired a full-time “sanitation ninja”—a position that will extend beyond the pandemic—that does nothing but clean surfaces from open to close.
The brand entered the pandemic with four stores and ended 2020 with six. The Rookwood, Ohio, location opened in September while another restaurant debuted in Troy, Ohio, in late November. The opening in Troy was so successful that carryout had to be shut down temporarily because of the influx of orders.
With restrictions still in effect, off-premises has remained the game changer.
Glory Days Grill saw same-store sales at corporate stores rise 3 to 5 percent to begin 2020. But because of COVID circumstances, those locations finished the year down 30 percent. The chain was shielded from further damage thanks to the launch of online ordering through Olo. Off-premises sales skyrocketed from 10 percent prior to the crisis to 35 percent throughout the year.
The chain relented on its third-party delivery ban in December after third-party companies came to the table with more reasonable commission negotiations. So far, that’s made the difference in 2021. Through mid-February, corporate stores were declining around 11 percent, and off-premises reached a mix of 42 percent.
The restaurant made moves on the legal front, as well. Robert Garner, cofounder of Glory Days, joined the Maryland Restaurant Coalition, which entered a lawsuit to end dining limitations and increase capacity.
The Toasted Yolk started by quickly moving past the initial shock of COVID in March. CEO Chris 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 more than tripled and remained at 20 percent toward the end of 2020 as dine-in guests returned.
In late March, the chain announced that it added single and multi-unit franchise owners in Tennessee and Alabama. Toasted Yolk has plans to dive into Florida shortly thereafter.
In December, the franchise opened its lowest-cost cafe to date in League City, Texas for fewer than $500,000. This fête was accomplished due to the brand's unique opportunity to expand and tactically take advantage of lower-cost real estate. This June, the chain will grow in the Houston-area, as well as four to five additional units in the latter part of the year.
Paul Mangiamele, CEO of Bennigan's and Steak & Ale, had a goal to leverage the emotional connection guests have with his concepts, and unlock avenues to growth, such as ghost kitchens.
Kinseth Hospitality Companies, which directs 75-plus hotels and runs Bennigan's stores in Iowa, inked a licensing agreement to debut two virtual kitchens under the “Bennigan’s On The Fly” banner. Kinseth will offer Bennigan’s On The Fly for delivery, and to its guests, in two of its hotels.
Bennigan’s is also forging ahead with a redesigned prototype that goes back a couple of years; the option to open around 5,200 square feet or so instead of 8,000 to 10,000.
In the last few years, Bennigan’s opened new franchise locations in Melbourne, Florida; Veracruz, Mexico; Larnaca, Cyprus; Doha, Qatar; and Amwaj Islands, Bahrain. It’s new design proved a fit for secondary, smaller, markets, such as Steubenville, Ohio; Mandan, North Dakota.; and Monahans, Texas. A new Bennigan’s On The Fly is headed to Peoria, Arizona in 2021.
In the fall, Concept Entertainment Group changed Grand Central Restaurant Bowling Lounge into Central Bowl, Arcade, and Food Hall. Inside that space, the company launched online food hall Central Kitchen, which serves Thirsty Lion and multiple virtual concepts across a variety of cuisines. In the months following, Central Kitchen expanded from the downtown Portland location to Thirsty Lion kitchens.
On one platform, guests are able to choose among five brands—Thirsty Lion and virtual concepts Soy Joy, Southern Jewel, Killer Wings, and Pizza and Spice. Soy Joy Kitchen features rice bowls, sushi, ramen, and other Asian dishes while Southern Jewel offers Southern fried chicken, Nashville hot chicken, sliders, and other Southern specialties. Killer Wings serves boneless and traditional wings with a variety of sauces and Pizza and Spice hosts a large selection of gourmet specialty pizzas and salads.
Other virtual restaurants are on the way, including a Mediterranean concept, a health-conscious brand, and a coffee/breakfast burrito idea.
Despite First Watch’s strategic pause, it still managed to open about 20 restaurants last year. It also didn’t close a single restaurant permanently due to the crisis.
On March 15, First Watch opened its first Greater Chicago location in Oak Brook. The restaurant marked the first of what the company believes will be three to four restaurants per year in the Windy City for the foreseeable future.
Notably, it’s a second-generation build, just like another recent opening in Winter Park, Florida. This is something CEO Chris Tomasso believes will emerge as a common theme.
Some of the locations are bigger than what First Watch is used to. The Oak Brook store, for instance, stands 4,200 square feet. This isn’t a negative exactly, despite the broader industry rush toward smaller boxes. First Watch is converting the extra space toward some pandemic-triggered enhancements, things like dedicated to-go areas, second make-lines in the back, or larger patios.
Iron Hill Brewery has been rounding a number of milestones as of late. In the fall, the brand opened a large-scale production facility in Exton, Pennsylvania, which marked its first foray into the retail side of beer. The timing was especially fortuitous; Iron Hill had already laid the groundwork for selling canned beer when COVID-19 struck and decimated dine-in business across the restaurant industry. The company entered retail stores in late 2020 and is currently selling in more than 500 stores in Pennsylvania and Delaware.
Within the same structure as the production facility is another fledgling venture. Part restaurant, part R&D hub, the brand’s first Iron Hill Taphouse began offering takeout in late December, and then expanded to limited indoor dining in January.
With about 15–20 items on the menu at a time, the Taphouse is a way to explore new dishes and solicit guest feedback. The food is still taken very seriously, but the atmosphere is more akin to a fast casual.
JINYA’s story, like countless others, was about pivoting. That’s what motivated the company to transform its bushi by JINYA store in L.A. into a new pickup and delivery-only concept.
The company completely remodeled the space by removing all tables and chairs and placing a counter in front. The rebranded restaurant leverages upgraded technology to keep labor costs low, such as customers using a QR code to order online. And to meet the demand for contactless transactions, bushi added shelves so guests or delivery drivers can pick up their orders without interaction.
bushi adopted a smaller menu that highlights ramen, hand rolls, karaage (Japanese fried chicken), rice bowls, and a $20 ramen, hand roll, and karaage combo. The brand, which began as a full-service concept in 2018, closed in March, but reopened in August.
“We were looking ahead and trying to make something that people would want in this environment, and it's worked out for us,” Marketing Director Justin Bartek says.
Another Broken Egg's COVID downturn turned out to be more a lull than long-term setback. From late March to August, same-store sales trended negative, year-over-year, across the chain. But it’s boasted positive figures since September. As of mid-December, Another Broken Egg’s system was double-digit positive against 2019. Some units, even though they were shuttered for two or three months, were actually positive for the year because of the ground they’ve made up. Not just on a week-to-week basis, either, but against the entire previous fiscal calendar.
The brand has already signed agreements in 2021 to open an additional 11 locations and debuted new restaurants in Orlando; Bossier City, Louisiana; and Cincinnati. All locations will feature the brand’s expansive full bar and signature hand-crafted cocktails that complement Another Broken Egg's southern breakfast, brunch, and lunch menu.
The restaurant wants to open up to 18 locations in 2021 and reach 300 units open and in development by 2023.
Before COVID, only about 30 of Huddle House's roughly 340 restaurants had online ordering integrated into their operations. By the start of 2021, 92 percent of open locations adapted to offer takeout, delivery, and curbside pickup.
The breakfast chain has completed two prototypes with more off-premises capabilities, as well.
One version includes a variety of drive-up window options, depending on the characteristics of the site. It has storage dedicated to off-premises, staging for third-party delivery, curbside pickup areas, a redesigned and efficient production space that includes a heated and chilled pass-through area, and new equipment such as induction burners and a kitchen display system. The space offers 70 seats in roughly 2,150 square feet. The building can be expanded to more than 77 seats on the same concrete pad at nearly a neutral cost. The other prototype is a slightly larger building structured to hold 85 or more seats. It has all the same operational improvements and the same off-premises tools.
Once the dust settled a bit, Firebirds aimed to become a one-stop shop for guests. And a natural extension, given the chain cuts all its beef, seafood, and poultry in-house, was to introduce a “Butcher Shoppe” program where customers could grab raw items and make them at home. In certain markets where laws allow it, Firebirds launched FIREBAR To-Go, which packages drink options.
The chain also created makeshift drive-thrus in which guests can order online, pull up, and have food simply placed in the backseat, trunk, or wherever. In terms of digital, Firebirds fine-tuned a virtual concept called FireBurger, which launched via DoorDash. Additionally, the company is also in the final stages of “re-skinning” its online ordering system on the front-end to improve the guest-facing experience. Firebirds also started a brunch test in August in Florida that’s received positive feedback.
Xperience Restaurant Group is known for its brunch service across many of its brands. It runs Acapulco, Chevys Fresh Mex, El Torito, El Torito Grill, Las Brisas, Who Song and Larry's, Sinigual, SOL Cocina, and Solita.
Some of the upscale concepts historically offered plated brunch. Others, like El Torito and Acapulco, were known for extravagant buffets, and have been for decades.
When COVID hit and regulations flooded in, this would have been an easy spot to open the pandemic excuse valve and save some capital. XRG did the opposite. It reconfigured the setup, erected plexiglass, and put attendants behind the barrier at each station to guide diners through the entire process.
Additionally, XRG didn’t pare down any of its menus. The company was down as much as 90 percent in sales early on when the on-premises game went dark. It clawed its way back to 65 percent or so of prior-year business before outdoor dining and other options progressed the system to single-digit declines in early February.
By the end of this month, with a Fort Smith, Arkansas, venue opening March 29, Walk-On’s will have 51 restaurants, or net growth of 18 since the beginning of last year (10 opened in 2020).
It expects to open upward of 25 restaurants this year, and is holding steady on its broader view of 150 additional venues over the next five. With the help of an investment from 10 Point Capital, Walk-On’s is eyeing new franchise opportunities in Indiana, Iowa, Kansas, Kentucky, Nebraska, North Carolina, Ohio, Virginia, and Wisconsin.
The brand’s “Bulldog” prototype is, give or take, about 7,000 square feet compared to the typical 8,000 to 9,000 square feet. It was actually more like 6,800 until a Tampa-area franchisee suggested they add a dedicated take-out entrance with a waiting area. This smaller design should allow Walk-On’s to capitalize on second-generation spots as they pop up from COVID-related closures. Also, it offers potential to cut 20–25 percent off buildout costs for franchisees.