Restaurants. Prior to the pandemic, the up- scale, wine-centric chain had been staunch- ly opposed to delivery. “We’re experiential,” founder and CEO Tim McEnery said. “We want people to come into the restaurant.” Still, the company had created a delivery playbook, just in case. When its dining rooms were forced to close, it put that plan into mo- tion in four days. Innovations like these helped FSRs stay above water during the first few months of the pandemic. Today, they are part of the new normal. Delivery alone made up 9% of all full-ser - vice sales last year, up from 4% in 2019, ac - cording to Technomic data. “People have be - come more homebodies,” said McEnery. Cooper’s Hawk actually stopped offering delivery as restaurants reopened. But it re - launched the service a few months ago after realizing that some consumers prefer it. It opened up a whole new way of doing business for a segment that historically meas- ured its success by butts in seats. But it also threatened to erode full-service’s ethos. “You forget that people come to full ser- vice because they’re taking time in their day for a pause,” Eisenacher said. “I do really wor- ry that hospitality is being forgotten, and so if there’s something I can say for full service, we can’t forget why people use us.” When consumers emerged from lock- down in the summer of 2021, they validated that idea. They wanted to indulge, celebrate and participate in the world again, and many of them went to full-service restaurants to do that. That has been good for experiential con- cepts such as Cooper’s Hawk, which has done well even beyond the post-lockdown frenzy. In 2023, the chain’s sales rose more than 19%
year over year, according to Technomic data. “It’s not at that level of pent-up demand right after COVID,” McEnery said, “but I think it’s continued for sure.” Other chains that focus on experience, such as Texas Roadhouse and Fogo de Chao, have also seen strong growth. Same-store sales at Texas Roadhouse rose 8.5% in 2024 amid an otherwise sluggish year for casual dining. “The company’s ability to maintain strong traffic growth is underpinned by its commit - ment to providing a high-quality dining ex - perience,” Zacks Equity Research wrote in a report on the chain. But the pandemic also habituated consum- ers to the luxury of food delivery and takeout. More than half of adults say that takeout is an essential part of their lifestyle, and 41% say the same for delivery, according to the National Restaurant Association’s 2025 state of the industry report. The numbers are even higher among Gen Z and millennials. This has divided consumers’ dining pat - terns into two distinct occasions: experience or convenience. The polarization has been hard on full-service brands that don’t special - ize in either. “Consumers have just rethought their full-service experience, and what’s really get - ting hurt are those in the mid-range,” Pawlak said. Indeed, two of the largest restaurant bankruptcy filings last year—Red Lobster and TGI Fridays—blamed changing consumer hab - its stemming from the pandemic and the en- suing inflation, among other things. The shift has also been on display in the growing number of turnaround campaigns underway at full-service brands. Applebee’s, Outback, BJ’s and Red Robin are all focusing
Delivery alone made up 9% of all full-service sales last year, up from 4% in 2019, according to Technomic data. on improving their food and simplifying their operations so that customers come away with a better experience. They’re also investing in remodels to improve the appearance and at - mosphere in their restaurants. “What I care about is when that guest leaves the restaurant, I want them to be ex - cited to return and have a strong intent to re - turn and drive frequency of visitation,” said Mike Spanos, CEO of Outback parent Bloom- in’ Brands, during an earnings call last month. “That’s what matters.” Notably, off-premise has not been as much of a focus of these turnaround plans. Chains such as Red Robin and Chili’s have wound down delivery-only virtual brands they add - ed during the pandemic in favor of focusing on their regular operations, for instance. 2025 is expected to be another difficult year for consumers, and competition will be fierce. Full-service retrenchment will like - ly continue for a while. But Pawlak believes these changes will ultimately bring the seg- ment into a better place. “There’s still opportunity for full-service restaurants, but they have to change with what consumers are looking for and how the consumer has changed since the pandemic,” he said. “Convenience is paramount and so is experience.”
APRIL 2025 RESTAURANT BUSINESS
49
Powered by FlippingBook