The Death of the Casual Dining Chain (and what’s being done to stop it)

Jeremy Klein
Sep 6, 2017 · 6 min read

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When was the last time you stepped into a casual dining chain like Chili’s, Applebee’s, or Buffalo Wild Wings? If you’re like most Americans, it’s probably been a while. Recent years have seen a significant decline in the casual dining restaurant industry. According to industry tracker TDn2K, casual dining chains as a whole made less money than any other type of restaurant in 10 out of the 12 months of 2016. Further, many big names have suffered major losses, with Applebee’s recently announcing it will close more than 130 restaurants, stocks of Brinker International (Chili’s parent company) reaching their lowest price in years, Ruby Tuesday selling 95 restaurants and looking for a new CEO, Red Lobster going private in 2014, and several other chains following similar patterns.

Why exactly is this? If you’re between 18 and 35 you probably have a simple answer: they’re just not cool. While this very well may be the case, there are a variety of factors that contribute to the perceived lack of “coolness” now associated with casual dining chains.

Many fast-casual restaurants use trendy branding strategies the emphasize the freshness, healthiness and simplicity of their food

A large reason has to do with the rise of dining options that don’t involve going to a restaurant and sitting down. Many attribute casual dining’s decline to the rise of fast-casual restaurants such as Chipotle, Panera Bread and Boston Market. These places often use fresh and locally sourced ingredients to provide the same quality food as casual dining chains, only they provide the speed of a fast food chain and the atmosphere of a trendy independent establishment. From the perspective of a younger person, the fast-casual experience of quickly getting decent food in a cool and trendy environment trumps waiting for similar-quality food in a dark and all-too familiar Applebee’s as you’re surrounded by people you perceive as the elderly. It’s also worth mentioning that in many cases fast-casual chains have successfully marketed themselves as healthy.

Other options involve not going out at all. The rising popularity of delivery services such as UberEats, Postmates and GrubHub allow hungry people to get good food without leaving their homes. On top of that, grocery stores have found ways to compete with restaurants more and more over the years. According to the Department of Agriculture, grocery costs went down by 1.3% in 2016. This, with an emphasis on healthier eating and a tendency of millennials to eat at home, makes eating at home all the more appealing.

This may explain why sit-down dining in general has been less popular. After all, last year saw a 2.4% drop in same store restaurant sales across the country, and that includes all types of restaurants. Yet as I mentioned earlier, casual dining restaurants were shown to be the weakest in the industry. Why them specifically?

This is a result of changes in culture. Casual dining chains are associated with suburbs, mass-consumerism, corporatism, and low-quality food and service. The restaurant industry is seeing the entrance of an emerging generation of city-dwelling, anti-corporate, affluent young people who are looking for something very different than a traditional sit down casual dining chain experience.

How Casual Dining Chains are Trying to Adapt

A prototype of the re-branded Applebee’s restaurant. Applebees.

Aware of the source of their downfall, many of these companies set out to change their brand to appeal to millennials. The most drastic change came from Applebee’s, who over the past few years re-branded themselves as a modern bar and grill in order to appeal to “a more youthful and affluent demographic with a more independent and even sophisticated dining mindset”. To do this, they remodeled some of their locations and started serving unorthodox dishes such as sriracha lime-sauce shrimp and a pork, ham and bacon sandwich (the infamous triple pork bonanza). Many of the other chains have similar strategies involving an attempt to sell to a younger, more urban crowd. Chili’s began selling craft beer, and TGI Friday’s are trying to replicate a gastropub by emphasizing the bar and endless appetizers.

For some of these restaurants, it’s too early to tell whether these new strategies are working or not, but it’s generally not looking too good. In the case of Applebee’s, their re-branding effort completely backfired. The updated aesthetic and menu did not end up appealing to millennials, and in the process turned off regulars. The result was a sales drop of over 6% from last year.

Other restaurants have found some success in attempts to switch industries and build fast-casual restaurants. Tony Roma’s, a place I completely forgot about, opened a trendy fast casual restaurant called TR Fire Grill in Orlando to great success. Similarly, Cracker Barrel has opened a few fast-casual locations called Holler and Dash and Denny’s is working on “The Den”. This strategy may not last, however, as there have been recent reports that fast-casual growth is slowing and that the trend is starting to fade.

Red Lobster is an interesting case of recent success. After years of drops in sales, the seafood chain had reported positive comparable sales for the last six quarters (as of May 2016) and went up 10 places to the fourth highest rated casual dining restaurant from 2015 to 2016, according to the Nation’s Restaurant News survey. Perhaps most strikingly of all, Red Lobster was named top restaurant choice of 18 to 24-year-olds by Nation’s Restaurant News Survey, suggesting that they are appealing to millennials more than any other casual dining chain.

Red Lobster

So how is Red Lobster going against the industry trend by increasing sales and appealing to millennials? They’re ignoring millennials and dining trends all together. Unlike their counterparts, Red Lobster is making no effort to appeal to specific demographics or trends. Instead, they are simply working on improving the quality of their restaurant. They are making practical changes such as increasing the size of their shrimp by 47%, changing cooking practices to improve taste, adding exciting new dishes and beverages to their menu, and responding to common customer feedback by updating their dishes. By simply working towards making their restaurant better, they have successfully appealed to multiple demographics.

If you think about it, this makes complete sense. Casual dining chains will always be just that: large, corporate, heavily-advertised establishments associated with suburbs and older generations. People, especially younger people, will always have these perceptions and will always have the option to go somewhere different. Instead of desperately trying to re-brand themselves and inevitably failing, Red Lobster simply improved the experience customers have at their restaurants.

Anyone can argue with what a casual dining chain is and what it stands for, but no one can argue with great food and a great dining experience. Each generation has their own tastes and preferences, but tasty food is universal. That’s what casual dining chains should be striving for.

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American Restaurant Supply Your source for insights, news, and tips for those in the food service industry

Jeremy Klein

Written by

Blogger/Content Writer for American Restaurant Supply

American Restaurant Supply Your source for insights, news, and tips for those in the food service industry

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