Casual dining opportunities re-establish themselves in the world of franchising
Sit-down restaurants, also known as casual restaurants, have re-established themselves in the world of franchising - a world more often associated with such fast-food standards as McDonald's, Burger King, Wendy's, KFC, Taco Bell, and Subway, for example.
For franchisees, this means renewed opportunity as consumer demand for more a elaborate, tasteful, and comfortable dining experience generates growth both in established brands and in new concepts with strong growth potential. And in between the fast food (also known as quick-serve restaurants, or QSR) and sit-down casual segments, with some overlap, the fast-casual segment is thriving as well. As both franchising and the American consumer mature, there is more than enough room for all three segments.
Historically, the sit-down category predates the rise of the fast-food giants, and it has made a comeback in recent years. One factor, of course, is the beginning of the retirement years for the Baby Boomers, who now have more time - and more disposable income - on their hands than they did during the decades they were grabbing a quick snack on the way to or from work. Another is simply novelty: consumers always want something new, and who doesn't like sitting down and being treated well? From breakfast through lunch and dinner, a higher-quality dining experience is back.
While Starbucks and Dunkin' Donuts sell coffee and baked goods to the morning's hurry-up consumers, others prefer to sit down and be served in relative leisure at such traditional favorites as Denny's, Friendly's, IHOP, or Huddle House, for example. The Original Pancake House, founded in 1953 in Portland, Oregon, still serves up its traditional Apple Pancake and confectionary sugar-covered Dutch Baby at more than 100 locations. Waffle House, which debuted two years later in Avondale Estates, an Atlanta suburb, blossomed as a chain in the 1960s and 1970s with its iconic yellow signs becoming part of the landscape along the expanding U.S. Interstate Highway System; in 2006, Waffle House topped 1,500 units.
Even venerable Dairy Queen, whose first store opened in 1940 in Joliet, Illinois, has added sit-down breakfast at some of its restaurants. With more than 5,600 units and now owned by Warren Buffett's Berkshire Hathaway, DQ has come a long way from its soft-serve frozen dessert treat beginnings.
These "old timers," still alive and thriving, set the stage for today's franchise winners. The sit-down segment has come of age with such concepts as Chili's, Applebee's, Ruby Tuesday, T.G.I. Friday's, Red Lobster, Olive Garden, Bennigan's, and more. One household American name, International House of Pancakes, or IHOP, recently acquired one of these successful newcomers -- Applebee's - hoping to rejuvenate the relative newcomer by turning its company-owned stores into franchises.
As the sit-down, casual restaurant segment matures, consolidation is coming increasingly into play, as it has for fast-food franchises in past decades. Several well-known casual restaurant names, which compete with each other for the consumer's heart and mind, send their royalties back to a common corporate parent. Brinker International, for example, offers diners - and potential franchisees - a choice of Chili's Grill & Bar, Romano's Macaroni Grill, On The Border Mexican Grill & Cantina, and Maggiano's Little Italy. Founded in 1975, Brinker has more than 1,600 restaurants worldwide with annual system-wide sales topping $4 billion.
And since 9/11, airports have proven a lucrative venue for sit-down, casual, and fast-casual brands. Increased security and more plane changes have resulted in travelers spending more time in airports, while increased delays have not only travelers, but family and friends doing the same. The result? Skyrocketing demand for more than a sandwich, burger, chicken, or pizza. Travelers are looking for more entertaining, enticing, and satisfying ways to pass the hours and fill their bellies at airports before boarding their no-food flights or driving the couple of hours back home.
The standout leader in this field is HMSHost (formerly Host Marriott Services). After 9/11, the company turned disaster into opportunity by recognizing and embracing the new reality. HMS not only brought such well-known quick-casual names as Starbucks, Sbarro, and California Pizza Kitchen into airports, but also succeeded with full-service restaurants including Romano's, Outback Steakhouse, and Chili's. With those successes, the company collaborated with several well-known non-franchise names to pioneer entirely new sit-down restaurants such as Jose Cuervo Tequileria, Dewar's Clubhouse Bar & Grill, Casa Bacardi, Dick Clark's American Bandstand Grill, and Fox Sports Sky Box, each designed to appeal to the tastes of different travelers.
Adapting to the ever-changing tastes of American consumers, building on the past and inventing the new, franchise companies are making sit-down dining affordable again - not only for customers, but for potential franchisees. What's your pleasure?
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