Survival of Full Service: How the Segment Needs to Fight for Growth

In last month’s Foodservice Digest column, we discussed the growth of limited-service chains in 2015 — fast-casual chains in particular. The foodservice landscape has shifted in favor of LSRs, and full-service chains are losing market share as a result. While FSR legacy brands are particularly struggling to recoup losses, a handful of notable FSR chains are stepping it up with quality, ambiance and value enhancements. It’s these demonstrated strategies that both struggling chains and newcomers should emulate. Here are some highlights from the standout full-service menu categories of 2015:

  • Sports bars — Sports bars saw an immense increase of 8.2% in 2015, thanks to their adult beverage and eatertainment focus. Quickly growing sports bars are placing emphasis on local and seasonal craft beer programs as well as beer presentation (including temperature and glassware) to help appeal to millennials. Legacy sports bar chain Dave & Buster’s also performed well last year, confirming that consumers are seeking entertainment for more of their dine-out occasions.
  • Steak — Top 500 steak chains propelled sales a notable 6.0% in 2015. Approachable and fun steakhouses are excelling, including value-oriented Texas Roadhouse. Contemporary and upscale churrasco chains are also thriving, such as Tucanos Brazilian Grill and Fogo de Chao, boasting an exciting Latin experience and large portions. In addition, the uniquely positioned steakhouse STK, which targets female clientele with smaller portions and a chic lounge atmosphere, secured the fastest-growing spot last year.
  • Family style — Despite some long-established midscale brands closing units, family-style chains saw improved sales of 3.1%. People are drawn to the quality and value-oriented fare that is increasingly found among a.m. eateries like First Watch, Another Broken Egg Cafe and The Egg & I Breakfast & Lunch, all of which saw great sales in 2015. Even family-style giant IHOP grew sales 8.1% last year, during which time it launched a modernized prototype and a new logo.
  • Varied menu — The varied-menu category had standout winners in 2015, though the category as a whole only grew sales 2.9%. The fastest-growing varied-menu chains included Bareburger, offering craveable, organic and natural burgers, and Cooper’s Hawk Winery & Restaurants, specializing in proprietary, handcrafted wine. Aligning with the success of sports bars, other quickly growing varied-menu chains feature an entertainment differentiator, from KISS bandmates’ Rock & Brews’ concert environment to Bowlmor Lanes’ bowling alley and arcade.

AS I SEE IT, growth is becoming increasingly difficult in the full-service segment. Legacy FSRs need to focus on creating a fresh and modern experience, and they will have to take some risks to reap any rewards. Many of the successful full-service chains discussed here are boosting sales by appealing to millennials through better bar programs and a fun and entertaining dining experience. Demonstrating value through quality menu items and service is a must. Faltering full-service chains should look into how they can improve their adult beverage programs, ambiance and breakfast and lunch programs in order to try and steal back market share from the mounting competition.

Note: This content originally appeared in the May 2016 issue of Technomic’s Foodservice Digest newsletter.

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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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