It’s official: January is indeed the worst month of the year for restaurants. Between 2013 and 2019, traffic during the month of January was 6% lower than the average month and 11% lower than the peak month of June, according to The NPD Group’s latest Seasonality Index for Total Restaurant Traffic. To overcome the slump, operators will need to offer incentives or promotions that draw consumers out of their homes and through restaurants’ doors, said David Portalatin, vice president of foodservice for NPD. Below, Portalatin outlines four key areas focus to boosting January traffic, along with examples of operators who have had — or hope to have — success with such tactics.

Capitalize on all those gift cards

Gifting is huge in November and December and restaurants often get a big piece of that pie.  According to NPD data, 46% of consumers plan to purchase tangible items or experiences for the upcoming holiday season. The No. 1 choice of gift? Food and beverage, as in restaurant gift cards, wine tastings and other similar experiences. Additionally, NPD found that customers redeeming gift cards, tend to spend a little more on those visits. Fuzzy’s Taco Shop, a fast-casual chain specializing in Baja-style Mexican cuisine, will once again run a program that incentivizes consumers to redeem holiday gift cards in January.  For every $25 gift card purchased now through the end of December guests receive a bonus $5 gift card to spend in January. Fuzzy’s, which has about 150 locations, is hoping the incentive will generate similar success to 2018, the first year of the bonus card program. Total gift card sales during the 2018 promotional period increased by 51% over 2017; the average activation value increased by 7% over the rest of the year; and bonus card redemption accounted for more than 4,400 guest visits in January 2019. “By offering the $5 bonus card, [guests] can choose to keep it for themselves or add to the gift they’re already giving,” said Laura Purser, Fuzzy’s vice president of marketing. “It’s a win-win for the brand because it allows us to be able to reward our loyal fans while also introducing the undeniable greatness of Fuzzy’s Taco Shop to new guests.”

Promote resolution-friendly foods

Consumers resolving to eat more healthfully in the new year, often tend to eat more meals at home, Portalatin said, adding that restaurants could offset this behavior by promoting their healthful offerings in January. To capture resolution-focused, healthier eaters and re-engage year-round dieters, Mooyah Burgers, Fries & Shakes is planning a big push around Lifestyle Burgers, a line of gluten-free, Paleo, vegetarian and other burgers designed to meet a variety of dietary preferences and goals. “We have featured our Iceburgers and Loaded House Salad in January of previous years with good results, but we expect the Lifestyle Burgers to be even more popular during this time when consumers are focusing on health goals and achieving resolutions,” said Natalie Anderson-Liu, Mooyah vice president of brand. As part of the push to highlight healthier burger builds, the fast-casual concept will also introduce The Vegan Burger.  A Dr. Praeger’s brand Black Bean Burger, The Vegan is topped with avocado, grilled onions, sautéed mushrooms, lettuce, tomato and barbecue sauce and served on a potato bun. Mooyah has about 70 domestic locations and 25 units in the Middle East.

Focus on a fresh holiday

Other than New Year’s Day, there are no other festive, national holidays in January. With reasons to celebrate noticeably absent, Portalatin suggests operators create their own events to get people to dine out. Sunda New Asian, a creative Asian fusion restaurant with locations in Chicago and Nashville, seizes January as an opportunity to celebrate events that have a connection to its brand, such as the Chinese New Year. “Sunda embraces events that align with and celebrate the brand — Chinese New Year is a great example,” said Billy Dec, founder and CEO of Rockit Ranch Productions, the hospitality company behind Sunda. “We have live lion dances, special menu items and more.” Among the dishes on Sunda’s Chinese New Year menu this January 25 to February 13 will be dishes with traditional or symbolic ingredients, such as Hong Kong Steak Lo Mein, Lion’s Head Meatballs and Almond Jelly Pudding. Additionally, Rockit Ranch Productions has had success driving January traffic by appealing to fellow hospitality and service industry colleagues who will be coming off a busy holiday season. “Whether we are dropping off personalized gift certificates for their staff or working with them on a bigger partnership, industry relationships are a big part of our business and we make sure to make it a priority,” Dec said.

Double down on delivery

January traffic and sales are often soft because of bad weather in much of the country. But consumers’ need for a convenient meal doesn’t go away just because it’s cold and wet. “There’s an opportunity to further accelerate delivery,” Portalatin said. “Help people stay snug and cozy.” To fight against consumers cutting back on going out in January due to colder temperatures or the over-indulgence of the holidays, Mooyah has made the development of a robust third-party delivery program a key initiative this year. “When guests can access us in ways that are convenient for them, it will lessen the impact of those seasonally slower times,” Mooyah’s Anderson-Liu said. – Source: Restaurant Hospitality.

Granite City Files for Bankruptcy to Facilitate Sale

After “an intensive review of strategic alternatives,” Granite City Food & Brewery Ltd., the parent company of its eponymous concept and sister brand, Cadillac Ranch All American Bar & Grill, filed for Chapter 11 bankruptcy protection in an effort to reorganize its business and facilitate a structured sale. The company said it has a “going concern sale” to KRG Granite Acquisition LLC for aggregator consideration of $7.5 million in place, a deal that includes certain liabilities. But this restructuring could only be accomplished by declaring bankruptcy, Granite City said in a release. It expects the transaction, still subject to bankruptcy court approval and an auction process, to conclude in February 2020. Granite City’s filing revealed it shuttered seven restaurants ahead of Chapter 11.

There are now 25 locations, as well as four rock-and-roll-inspired Cadillac Ranch restaurants. The company also owns a centralized beer production facility in Ellsworth, Iowa, which enables each unit to brew beer on-site (the production facility generates the “wort” that’s transported to fermentation vessels at Granite City locations). The company, which employs more than 2,200 employees over 15 states, secured a $5 million debtor in passion loan to fund operations through the auction and sale process in hopes of stemming further closures. It continues to operate as a “debtor in possession” subject to the supervision of the court. Granite City said it expects to continue operations without interruption during the Chapter 11 case. “The Granite City Board of Directors and management team have thoroughly assessed our strategic options and financial situation and unanimously agree that this structured sale process represents the best possible solution for the company,” said Richard H. Lynch, chairman of the board and CEO of Granite City, in a statement. “We believe pursuing this path will provide value to our creditors, enable one or more future restauranteurs to operate our locations, and preserve hundreds of jobs.” During the proposed auction process, interested parties could submit binding offers to acquire sustainably all of Granite City’s assets, free and clear of the company’s indebtedness and liabilities. Granite City Restaurant Operations, Inc., Granite City of Indiana, Inc., Granite City of Kansas Ltd., and Granite City of Maryland, Inc. all filed voluntary petitions under Chapter 11 as well.

The company filed a motion seeking to bring all of those bankruptcy cases together. In an affidative filed December 17 by Lynch, the company credited “increased competition in the casual-dining sector” for negatively impacting its operating performance and margins. “In addition to longstanding casual-dining chains with somewhat similar menu offerings [i.e. Applebee’s, Ruby Tuesdays, Houlihan’s, Outback Steakhouse, etc.], the [brand was] forced to compete with emergent and inexpensive fast casual outlets such as Chipotle Mexican Grill, Inc. and Panera Bread Co.,” Granite City wrote. Additionally, “the number of new entrants into the craft beer and brew pub space exploded during the second decade of the new millennium.” Granite City, founded in 1999, was an early entrant into the craft beer market sector, but now it “suddenly faced competition from hundreds of new brewpubs and craft brewers.” Many of Granite City’s locations were located in or near shopping malls and locked into long-term leases the company said appeared favorable at the time, typically with options to renew. It simultaneously spent heavy capital building out restaurants “in a manner that featured those distinctive characteristics associated with the brand.” Units are typically 9,800 square feet with interior finishes that incorporate granite and other rock materials and natural woods and glass. Granite City restaurants are open-concept and have outdoor patios. “As a result of the Great Recession that began in 2008, consumer income growth stagnated for nearly a decade. This led to an overall decline in consumer spending, including retail spending and spending to eat out,” the company said. During that same period, consumer preference shifted toward online shopping, Granite City said. That lead to more consumers eating takeout or ordering delivery, “as opposed to spending time for a sit-down meal at a casual-dining location.” The result: declining foot traffic in shopping malls and retail outposts where most of Granite City’s locations are or were located. “The confluence of these factors: increased and evolving competition, the proliferation of brew pubs and eating establishments featuring craft beer offerings, and changes in spending patterns and consumer preferences, all negatively impacted the profitability [of Granite City],” the company said. In-store sales and revenues shrunk in response. As foot traffic in malls dropped, so did Granite City’s guest counts such “that seemingly favorable long-term rental rates the [brand] had negotiated gradually morphed into above-market rates.” Granite City said its same-store sales declined in 2018 and year-over-year comps fell similarly during the first quarter and half of 2019, exacerbated by severe winter weather in the Midwest. Today, the company owes Citizens Bank $40 million in principal together with accrued interest, fees, and other amounts payable under the Citizens credit facilities. It also owes Great Western Bank more than $1 million. Granite City has tried to reroute traffic and sales declines this year. In February, it introduced a menu and guest experience relaunch in six of its markets. By July, it expanded to 17 additional locations. It also attempted to improve financial performance and enhance liquidity by pursuing lease concessions and seeking extensions of the time afforded to pay food and beverage suppliers. Consultations with advisers and discussions with Citizens led the company to explore strategic alternatives. Granite City closed its Downtown Indianapolis location on August 21 and then shuttered six more on October 25 (Carmel, Indiana; Orland Park, Illinois; Northbrook, Illinois; Peoria, Illinois; Lyndhurst, Ohio; and Mishawaka, Indiana). Source: fsrmagazine.