Midscale: No Longer Middling

What’s up with midscale?

Midscale restaurants’ same-store sales increased by 5.8% in the first quarter of 2015, outperforming every other segment (the all-industry growth rate was 4.0%). Some chains did even better: Cracker Barrel Old Country Store was up 11.4%, Denny’s up 7.4%.

This surge is a recent development. The midscale or family-style segment (defined as full-service restaurants with checks in the $8‒$12 range) has been muddling along for years. In 2014, these chains grew sales 3.2%, below the allindustry growth rate of 4.0%. Midscale concepts haven’t been trendsetters. The middle- and working-class consumers who are their core constituency have seen little income growth recently, constraining their food-away-from-home spending overall. Making things worse, midscale concepts have faced ferocious competition from fastcasual chains that offer a more contemporary, convenient and speedy dining experience at the same price point.

But now, midscale chains merit a second look:

  • Concepts are investing in much-needed unit overhauls and 21st -century technology. Sonny’s BBQ rolled out a 5,000-square-foot prototype that features bar seating facing the kitchen, new kitchen equipment and new technology (POS terminals and mobile tablets, a kitchen display system, software for online and mobile ordering and a loyalty-program module). First Watch unveiled a new “Urban Farm” interior design and a farm-freshinspired menu that includes local produce and a juice bar; a new waitlist app allows patrons to view wait times and add their name to a waiting list remotely via their mobile device. Cracker Barrel introduced a smaller “Fusion” prototype for urban locations and a new waitlist management solution that collects guest data and includes a mobile app for online reservations.
  • Many midscale concepts have moved away from their traditional identification with the breakfast daypart, building traffic and sales with attention-grabbing new meals and snacks (and deals) later in the day.
  • On the other hand, breakfast-and-lunch-only concepts are booming, playing to the segment’s traditional strengths while saving money with single-shift operations. Keep an eye on First Watch, which has acquired three competitors within the past 18 months.
  • A midscale specialty sector to watch: barbecue. Growing chains include Rib Crib BBQ & Grill and Rudy’s Country Store and Bar-B-Q.

AS I SEE IT, there’s room for turnaround even in the most traditional, least trendy segments of the industry. With continued investment in unit and technology upgrades and creative thinking about menus and operations, midscale concepts are likely to continue doing well as the economy improves.

Note: This content originally appeared in the July 2015 issue of Technomic’s Foodservice Digest newsletter.


Darren Tristano

Darren Tristano is President of Technomic Inc. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations.

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