The Casual – Dining Chain Remains Thoughtful about Sustainability and Giving Back to Local Communities . . . .

Snooze Fuels Growth with Impactful ESG Strategy

Snooze an A.M. Eatery first opened in 2006. What began in Denver, Colorado, has grown to 52 locations across nine states, and there are plans for an additional eight locations in less than a year.

A key pillar to expansion over the years has been a focus on environmental, social, and governance (ESG) strategy.

Chief marketing officer Andrew Jaffe says from the beginning, the breakfast restaurant explored how it could do good through the business.

“I think for us it’s always been a part of our brand ethos,” he says. “It’s always been a part of our culture.” According to a recent study from The NPD Group, Gen Z consumers are going out to restaurants less than previous generations, and care more about the values of the establishments they frequent. One example the study gives is that 16 percent of Gen Z care about sustainable sourcing compared to only 11 percent of older groups.

Snooze finds employees enjoy working for a company that’s doing good in the world, Jaffe says. Though the casual-dining chain has had labor issues like anyone else in the industry, its ESG values have helped with employee retention.

“I think that our competitive advantage in the market has a lot to do with our brand values, our cultural values, and what we stand for in and around our ESG approach,” Jaffe says.

One part of that approach is Snooze’s sustainable practices. For instance, there’s “snooze-approved food,” which means meals pass a set of company standards for things like animal welfare and social responsibility.

Snooze hasn’t wavered in its commitment to the quality of the supply chain, even during periods of inflation, Jaffe says.

“There’s no doubt, there’s got to be discipline in it,” he says. “But I think when you have a foundation of clarity around what you stand for, and what your food values are from a culinary standpoint, in a lot of ways that actually simplifies it.”

Another part of Snooze’s environmental efforts is waste diversion via single-stream recycling and composting. The brand currently diverts 90 percent, but it wants to reach zero waste.

“When food waste goes to landfills, that’s one of the main contributors to methane gas that’s emitted from landfills,” Jaffe says. “So, the more we can do to divert food waste from going into landfills, the better it helps our environment, and that’s always been a huge initiative for us from day one.”

Snooze also promotes resource conservation through efficient appliances, vegan menu options, sustainable construction, carbon-neutral takeout, and sustainability training for all of its employees, including the designation of a “change-maker” at each restaurant.

“That person is kind of the champion of all things as it relates to our initiatives in the community and all things that we’re doing to support the environment,” Jaffe says. “So, that’s how we really try to get traction within the restaurants.”

One of the change makers’ responsibilities is connecting with local nonprofits. During soft openings, Snooze offers free breakfast to these organizations, and on the anniversary of a grand opening, stores donate 10 percent to an organization of their choosing.

“That, for us, is a really important aspect of creating that connectivity to our communities, creating that connectivity for our local Snoozers to feel as though they’re having a positive impact in the backyard where they might also live and work,” he says.

Each year, Snooze gives one percent of its sales back to the community, like No Kid Hungry, World Central Kitchen, Young Farmers’ Coalition, and the Trevor Project. The company will donate more than $1.4 million in 2022.

The brand has also taken part in employee-centric initiatives including paid volunteer days, discounts to workers who carpool or bike to work, and planting a tree for every employee each Earth Day since 2017.

The Compass Foundation, a 501(c)(3), provides grants for employees when they find themselves in situations of financial need or require support for creative endeavors or other passions. The nonprofit is funded by other team members and grants.

“Whether they’re going through a health issue, or an impromptu loss of a family member, or a massive life event that is forcing them to need the support of Snooze—that’s why it’s there,” Jaffe says.

Snooze also puts a focus on its diversity, equity, inclusion, and belonging (DEIB), such as creating a DEIB task force in 2020 and making sure resources and education are available for employees.

“We think about it through the lens of educating ourselves, educating our Snoozers, we think about it through the lens of transparency, and just making sure that we continue to evolve ourselves as it relates to all things DEIB,” Jaffe says.

When companies look to approach ESG strategy, it is easy to get overwhelmed and do nothing, he adds.

“Focus on a few things that you think you might be able to do really, really well in your restaurant that you think can have a positive impact on the planet or have a positive impact on your community,”  Jaffe says. “These are things that may not feel like they’re really big, but they actually have a meaningful impact when you add them up over time.” – Source: FSR.

The National Restaurant Association has called on the Small Business Administration to distribute the aid immediately to restaurants whose aid applications were mothballed . . . .

The National Restaurant Association is Demanding the SBA release $180 million to restaurants in need

More than a year after the U.S. Small Business Administration revealed its Restaurant Revitalization Fund had run out of money, federal watchdogs say they’ve found $180 million still in the kitty, prompting industry advocates to demand the aid be distributed immediately.

“Now more than ever, every dollar appropriated by Congress for restaurant relief needs to be unlocked and put in the hands of operators struggling to keep their doors open,” Sean Kennedy, EVP of public affairs for the National Restaurant Association, wrote in a letter to SBA Administrator Isabella Guzman.

The communication demands the funds be passed along to restaurant applicants who qualified for RRF grants after the $28.6 billion pool created by Congress had been drained, a process that took only three weeks. At the time the RRF ran dry, the SBA said it would keep the unfilled grant requests in the order in which they were received in case Congress replenished the pool.

About 177,000 restaurants were left empty-handed. Lawmakers calculated that an additional $40 billion would be needed to provide those applicants with grants of up to $10 million.

Despite aggressive lobbying by restaurateurs and their advocates, Congress has balked repeatedly at allocating more money. Kennedy noted in his letter that a re-up “remains uncertain at best.”

The $180 million in remaining funds were discovered during a review of the RRF grant process by the Government Accountability Office, an independent federal watchdog that ensures money allocated by Congress is spent as intended. The GAO’s focus was on identifying processes that could be exploited by cheaters and scammers, in case the SBA ever ran another RRF program.

In passing, the GAO noted that $180 million remained in the SBA’s coffers. About $24 million had been set aside by the SBA to cover any litigation that might arise out of its administration of the RRF. The rest of the money came from awards that were returned or clawed back because qualifying standards weren’t being met.

The National Restaurant Association zeroed in on the $24 million, noting the law creating the RRF had not specified that a legal fund is carved out of the $28.6 billion allocation.

The discovery of undistributed funds comes as many restaurants are struggling to pay off expenses that were deferred during the coronavirus pandemic. Although industry sales are back to pre-pandemic levels for many establishments, a number of owners are still paying off back rents, tax payments, lines of credit, and other financial obligations.

“Restaurants remain battered with worker shortages, runaway food costs, and an uncertain level of customer confidence in the coming months. The need for relief has not abated,” Kennedy wrote in his letter to Guzman. “The need for relief has not abated.” Source: Restaurant Business.

The chain’s traffic fell slightly in the second quarter, which executives said is typical for summer. The decline came entirely on the to-go side of the business . . . .

The Latest from Restaurant Business, Sent Straight to your Inbox

In some ways, slower traffic at Texas Roadhouse this summer could be a good sign.

If the chain’s executives are right, the 0.8% year-over-year decline simply means customers are getting back to their normal routines, governed by work schedules and summer vacations that have traditionally made the 680-unit steakhouse chain a bit less busy in the warmer months.

“It really has felt like we’ve got back to a more seasonal process,” said CEO Jerry Morgan during an earnings call with analysts Thursday evening.

Despite the dip, the chain’s dining rooms are as full as ever: Dine-in traffic in the period was up 3.8%, meaning the decline came entirely on the takeout side of the business. To-go accounted for about 13% of average weekly sales, down from 14.8% the previous quarter.

“While our to-go percentage declined throughout the quarter, we are comfortable knowing that part of this decline was driven by a year-over-year increase in the number of guests dining in our restaurants,” said CFO Tonya Robinson.

She speculated that some customers might be moving from to-go back to dine-in. “I think some of that is just a function of being able to get into the restaurant during the week because wait times sometimes are so long,” she said.

The boost to dine-in did not hurt: Check average was up 8.4% as dine-in guests ordered more food and drinks, and people, in general, sprung for higher-priced entrees, Robinson said.

Still, the chain is continuing to invest in driving takeout as the channel remains well above pre-pandemic sales levels, Morgan said. It’s putting dedicated to-go areas in new restaurants and is rolling out a new “online ordering switchboard” that eases the flow of to-go tickets into the kitchen.

Overall, same-store sales for the quarter rose 7.6% year over year, and executives said demand remains strong.

“We’re pleased that we haven’t seen any signs of guest pushback or negative mix from the price increases that we have taken over the last 12 months,” Morgan said, adding that the chain will continue to be “cautious” on pricing. It hasn’t decided yet whether it will raise prices again this year.

Restaurant margins for the quarter were 16.6%, down from 17.7% a year ago, due mainly to commodity inflation of 11.8%. Robinson noted that beef costs slowed later in the quarter, which led the chain to lower its full-year commodity inflation forecast to 12%.

“That felt really great to see, especially after those prices spiking the way they did in Q3 and Q4,” she said.

Just as sales have returned to seasonal rhythms, she said, margins could too—and the third and fourth quarters tend to be softer. Robinson noted there are still a lot of “moving pieces” weighing on margins, including whether the chain decides to raise prices, but that the goal is to eventually get them back to 17% or 18%.

“A lot of the expectation about when that happens, it’s just going to be driven by the commodity outlook and labor outlook and what sales continue to look like,” Robinson said. “I don’t know if that will be a ’23 possibility. It will be great if it is, but that is still definitely a goal and we think it’s achievable.” Source: Restaurant Business.

The owner of Mooyah Burger and Cici’s Pizza completed its purchase of the Minnesota-based coffee chain last week. But he was eyeing it long before then . . . .

Wingstop saw traffic fall in the second quarter as inflation rose

Something unusual happened at Wingstop in the second quarter: Its same-store sales, which have been positive on an annual basis for 18 consecutive years, declined.

Domestic comps at the 1,858-unit chicken wing chain fell 3.3% in the period ended June 25, which executives attributed to a “perfect storm” of factors, including tough comparisons to a year ago as well as rising gas prices and other inflation that depressed consumer activity.

“We clearly did see a pullback in frequency, particularly with that low-income consumer,” said CEO Michael Skipworth on a call with analysts Thursday.

And yet the chain believes it can continue its growth streak this year with a handful of strategic moves designed to drive traffic in the second half.

The chain is expanding its relationship with delivery provider Uber Eats nationwide, for instance, which it expects to bring in new customers. Until recently, Wingstop had been listed only on DoorDash.

It’s about two weeks into the new partnership, and results have been “at or above our expectations,” Skipworth said. “That’s without really any advertising support about us being on Uber’s platform.”

In another big step, Wingstop will start serving chicken sandwiches nationwide after tests in four markets yielded encouraging results. The lineup of 11 sandwich options, rolled out in 60 restaurants in May, registered a 4% sales mix and was “highly incremental” to sales, Skipworth said.

The chain also has some dry powder in its advertising budget to further spur sales.

“We know that each of these levers will bring in transaction growth,” Skipworth said, adding that the chain has been “thoughtful” about deciding when to pull them.

With that, it reiterated its expectation for low single-digit same-store sales growth for the full year.

And even as its sales slid, the chain continues to boast a unique competitive advantage on the bottom line: While just about every restaurant’s food costs are going up, Wingstop’s are falling.

Bone-in chicken wing prices in the quarter fell 18.8% year over year, the chain said, and it’s anticipating an 800 basis-point improvement in food costs compared to the second half of 2021.

“Wingstop is a year ahead of other brands” on commodity inflation, Skipworth said. “We are experiencing meaningful deflation in our business as the price of wings has normalized from unusually high levels in 2021.”

Net income for the quarter rose 17.6% to $13.3 million compared to a year ago. The cost of sales did increase slightly, to $14.9 million from $14.2 million, due to higher labor costs and other expenses associated with the opening of six restaurants in New York City.

The chain believes its commodity advantage combined with a new set of sales drivers have it poised for a strong rest of the year. Investors seemed to agree: Wingstop’s stock shot up more than 28% as of midday Thursday.

“It really puts us in a spot that I think really highlights the unique Wingstop story,” Skipworth said. “We’re pretty excited about the back half of the year.” – Source: Restaurant Business.

Cheesecake Factory Says Covid – Not the Economy  — is Messing with sales

To many Americans, it might feel like COVID-19 is in the rearview mirror.

But for The Cheesecake Factory, the virus is as real as ever.

It’s COVID, and not the country’s economic turmoil, that has been causing the 308-unit casual-dining operator’s business to fluctuate from month to month and market to market, said CFO Matthew Clark on Wednesday.

“When you see the cases move up, you see sales come down. And then when you see the cases go down, you see the sales go up, probably higher than what is the sustainable level,” he told analysts during the chain’s second-quarter earnings call.

The chain’s same-store sales rose 4.7% year over year in the quarter, which was roughly in line with menu prices during the period. Revenues were $832.6 million, at the low end of Cheesecake’s forecast. The results had some analysts wondering whether customers were starting to slow their spending at the chain as inflation rages on.

“Who knows?” Clark said. “The trillion-dollar question is what is the consumer going to do and how are they behaving?” What he did say was that The Cheesecake Factory’s current sales trends don’t resemble those during the Great Recession.

“When we looked at that data, the trends there were much more moderated and broad-based across all restaurants,” he said. “Not these pockets that we’re seeing today. … That wouldn’t tell me that’s economics. That tells me there’s another factor in play.”

That factor, Clark said, is COVID-19. The chain has felt pressure in Southern California, where cases have been rising since March, and New England, which had a spike in May, but not so much in Florida and Texas, he said. When sales in one unnamed city slowed down recently, Clark Googled it and saw a local news headline that read “The summer surge is back.”

“We could almost be like a sounding board for the CDC,” Clark said. “You can track it. People can’t go into restaurants when they’re sick or they’re home taking care of people.”

In areas that are more stable in terms of COVID, he said, metrics like check averages, attachments, and dessert sales remain in line with expectations. And the chain’s mean performance over the past several quarters has matched 2019 sales, plus the price.

“That gives us a lot of confidence that no one is trading down,” he said.

Nor has the chain wavered from its predictions for the rest of the year: AUVs of $12 million for its massive restaurants and operating margins that match those of 2019.

To achieve that latter goal, though, Cheesecake is raising prices again to help offset higher-than-expected commodity and labor costs. It will begin implementing a 4.25% price hike as it rolls out a new menu, amounting to prices that are 7.5% higher than the second half of last year, Clark said.

It’s expecting commodity inflation of 14% to 15% for the year, which is about 200 to 300 basis points higher than its prior outlook, and wage inflation of 5%.

But Clark said there are signs that inflation has peaked. Cheesecake reported its lowest level of wage inflation so far this year and expects commodity costs to decline by 250 basis points between now and the end of 2022.

“If these trends continue, coupled with our higher menu pricing, we will still be on track to exit this year with four-wall margins at 2019 levels,” he said. – Source: Restaurant Business

Chipotle Investing in ‘Fundamentals’


Chipotle Mexican Grill, Inc. is investing in “being brilliant at the basics” after the fast-casual chain experienced a slowdown in sales during the latter half of the recent quarter, said Brian R. Niccol, chairman and chief executive officer. A newly launched operations initiative focuses on retraining employees on the fundamentals of the business.

“These fundamentals include having great culinary prepared and ready to serve, open to close in a food-safe environment, ensuring that restaurants are staffed and appropriately deployed across both the digital make-line and front make-line; improving order accuracy and timing for the digital business; and increasing throughput in hospitality for the in-store business,” Mr. Niccol outlined during a July 26 earnings call.

Net income for the second quarter ended June 30 was $259.9 million, equal to $9.32 per share on the common stock and up 12% from net income of $188 million, or $6.68 per share, in the prior-year period. Excluding unusual expenses related to certain legal proceedings, performance share modification, corporate restructuring, restaurant asset impairment, and closure costs, offset by an unrealized gain on investments, adjusted net income was $261.2 million, which compared with $212.8 million in the year-ago quarter.

Quarterly revenues totaled $2.2 billion, up 17% from $1.9 billion the year before.

Comparable restaurant sales ticked up 10%, and in-restaurant sales grew 36%. Digital sales represented 39% of food and beverage revenue.

“We were on track for comparable sales to reach the upper end of our guidance range for the first half of the quarter,” said John R. Hartung, chief financial officer. “Since then, we’ve experienced a step-down due to a combination of macro pressures, our ability to handle the growth with a relatively new workforce, and a return-to-normal summer seasonality for college-based restaurants. For perspective, about 15% of our restaurants are in college towns, and we’ve not seen normal seasonality in three years.”

Chipotle will increase menu prices by 4% in August to offset inflationary pressures, including increased costs for dairy ingredients, tortillas, and packaging. A new labor-management tool is expected to improve productivity in the company’s restaurants, Mr. Niccol noted. New restaurant openings represent another path to growth; Chipotle opened 42 restaurants in the past quarter, including 32 with a Chipotlane drive-up window.

“We now have 430 Chipotlanes, and results continue to exceed our expectations with Chipotlanes generating higher average unit volumes and higher restaurant-level margins,” Mr. Niccol said. “In fact, a recent opening of a Chipotlane in a small town in California had one of the highest opening day sales in the company’s history.”

Executives anticipate the company will generate mid- to high-single-digit comparable sales for the third quarter. Mr. Niccol touted the brand’s resiliency in a recessionary environment, noting Chipotle “over-index(es) with higher-income consumers.”

“So even though the lower-income consumer is slowing down, we’ve not seen that happen with our higher-income consumer,” he said.

Shares of Chipotle Mexican Grill on the New York Stock Exchange on July 27 closed at $1,510.00, up 15% from the day before. – Source: Food Business News.

Last year offered little in terms of favorable market conditions, but that didn’t stop a small enclave of casual-dining chains from expanding their footprints . . . .

The FSR Growth 23: These Restaurants Defied the Pandemic Odds in 2020

In many ways, the pandemic was a great equalizer for full-service restaurants. It didn’t matter whether a restaurant specialized in Mexican cuisine or sushi, barbecue or vegetarian fare. And just the same, longevity and size had a marginal bearing on how well a brand navigated the crisis. A new, relatively small upstart could fare just as well—or just as poorly—as a decades-old chain.

But in terms of 2020 expansion, one common thread seemed to connect the full-service chains that managed to add units to their existing pipelines; they fell under the casual-dining umbrella.

“Many skeptics used to say that casual-dining restaurants were a dying breed, but then we entered a global pandemic,” says Brandon Landry, co-founder, and CEO of Walk-On’s Sports Bistreaux. “While in lockdown, we quickly realized how much we all need and crave human interaction, and casual-dining restaurants provide that interaction in a comfortable and entertaining way.”

Walk-On’s was not only among the brands that debuted new locations in 2020, it also managed to grow its overall footprint by about a third (see chart on page 34). The Louisiana-based chain did have the benefit of nearly 20 years in operation and a strong franchise network, but even newer restaurants found that being in the casual-dining arena gave them a certain leg up.

Founded in 2014, Condado Tacos entered the pandemic with 17 units and still managed to open four new stores. Brand president Chris Artinian is an industry veteran, having previously served as the CEO of Morton’s and more recently, Smokey Bones. Though he has years of experience leading successful full-service restaurants, Artinian believes Condado Tacos is part of a new class of next-generation casual concepts. “I think over the last several years, what’s been important in our industry is a focused menu—clean, fresh, craveable—and in a manageable box. … We bring the perfect sort of balance of speed if you want more of a fast-casual experience,” Artinian says. “So, given our focused menu in being built for quality and speed, we’ve been able to meet this interesting need with the emergence of fast-casual, but still [meet consumers’] desire for experience.”

Limited-service restaurants, while still negatively impacted by COVID-19, were more insulated than their sit-down counterparts. But full-service restaurants that toed the fast-casual line were better positioned to succeed this past year.

That’s not to say operators needed a strong off-premises program pre-pandemic or that restaurants doing robust takeaway sales were guaranteed expansion opportunities. Both factors certainly helped, but growth largely came down to cash flow, existing commitments, and franchisee buy-in.

Little help from my friends—and investors

Only a few weeks before the coronavirus struck the U.S., Condado Tacos closed a deal with The Beekman Group, where Artinian was the managing director for the private equity firm’s restaurant and consumer channels. The fresh injection of capital helped the brand continue expanding, even if the actual store openings fell a few shops short of the ideal target.

Now growth is ramping back toward The Beekman Group’s initial targets; it will add nine new units this year and 10–12 in 2022, with an eventual pace of 12–15 per year.

Cooper’s Hawk Winery & Restaurants slowed its growth in 2020 but didn’t stop entirely. The pandemic did, however, force the wine-driven concept to spend a few months reevaluating its path forward.

“We had these different phases during COVID. So the first one was [shock] mode. After that, it was to try to ensure we could survive financially,” Cooper’s Hawk founder and CEO Tim McEnery says. “We just didn’t want to lose that much momentum.”

Being backed against a wall brought the brand’s strengths into sharp relief, he adds. The restaurant knew its business well, had a solid employee culture, and had diversified revenue streams thanks to its retail arm and membership-based wine club. And like Condado Tacos, it also had the financial backing and trust of a private equity firm.

“Having partners like Ares [Management Corporation], we were very lucky to know that they would always be there to support us,” McEnery says. “I knew we had to be incredibly fiscally disciplined at this moment in time, but if we paused all growth for the entire duration of COVID, we’d regret that after COVID. [Ares] totally agreed, and we just got right back into it.”

After a few months of formulating a game plan, Cooper’s Hawk resumed its expansion and finished last year with three new units in its system. The brand will add four in 2021, but McEnery expects it will be back to 6–8 annually by next year.

The show must go on

As counterintuitive as it may sound, opening new stores could, in certain instances, be more financially prudent. During the pandemic, some restaurants that were already far along in development plans decided to charge forward, even when the locations were opening with no dine-in service whatsoever.

That was the position Walk-On’s found itself in last year. Multiple locations were already in various phases of construction when the shutdowns began. So, the brand moved forward.

“One of our first areas affected was financing,” Landry says. “Despite the crisis, one restaurant opened for to-go and curbside only and set some impressive sales marks.” – Source: FSR.

Brand benefits from commodity deflation as other companies contend with rising prices . . .

Wingstop looks to buoy sales with a new chicken sandwich, Uber Eats

Wingstop Inc. is pulling sales levers like the introduction of a chicken sandwich in September and adding the third-party delivery platform Uber Eats to its DoorDash channel as it enjoys deflation in the price of wings, company executives said Thursday.

Addison, the Texas-based company, which released its earnings for the second quarter ended June 25, saw its domestic same-store sales decline 3.3% in the quarter as the company lapped last year’s government stimulus. Michael Skipworth, Wingstop’s CEO, and the president said on an earnings call Thursday that Wingstop saw dine-in trends pressure its heavy off-premises sales and it reopened all of its dining rooms and offered value options.

“Acknowledging that the lower-income consumer would be focused on seeking value when pursuing restaurant occasions,” Skipworth noted, “early in the second quarter we launched the Boneless Meal Deal — a bundle consisting of 20 boneless wings, four flavors, two dips, a large fry, all for only $15.99.”

Skipworth called it a “compelling value,” and it is the highest mixing bundle launched by Wingstop and made up about 7% of the sales mix in the quarter. It appealed to the “indulgent” occasion, he added.

Wingstop maintained its sales guidance for the year, saying full-year domestic same-store sales growth would be in the low single digits.

Skipworth said levers the brand is pulling in the second half of the year, besides value, would be its addition of Uber Eats delivery nationwide, increased marketing dollars and the introduction of the recently tested chicken sandwich systemwide in September.

Of the UberEats introduction systemwide over the past few weeks, he said, “We have known for a while this would be a sales-driving lever for us.” The company tested the platform in some restaurants in addition to the existing DoorDash offering.

“We have seen the lift it provided other brands who have made this move in the past,” Skipworth said. “While it’s only a couple of weeks into the UberEats national launch and without any advertising support, we are encouraged by the early results.”

Skipworth said Wingstop also was planning to deploy marketing dollars from its national advertising fund.

“As we look to the balance of the year,” he said, “we expect an increase of over 35% in the number of ad dollars to be invested providing us with the firepower to drive top-of-mind awareness and consideration as consumers become more discerning with their dining.”

In early September, Wingstop plans to introduce systemwide the chicken sandwich it tested at 60 restaurants in four markets in May.

The sandwich in that test achieved about 4% of sales, reaching internal targets, Skipworth said, and was popular during the lunch daypart.

“What we are really encouraged by is that these chicken sandwich occasions were highly incremental and mixed very nicely,” he said.

For the second quarter ended June 25, Wingstop’s net income was $13.3 million, or 44 cents per share, up from $11.3 million, or 38 cents per share, in the same period a year ago. Revenues were up 13.2% to $83.8 million, from $74 million in the prior-year quarter.

As of June 25, Wingstop, founded in 1994, owned and franchised more than 1,858 locations worldwide. That included 1,639 in the United States (of which 1,600 were franchised and 39 company-owned) and 219 franchised restaurants in international markets.

For 2020, Wingstop plans to open between 220 and 235 net new restaurants, which would be a growth rate of about 13% for the year.

The company opened 67 net new restaurants in the second quarter. The company opened its first restaurant in Canada, one in Toronto, and has a development deal for South Korea, which it sees as a step into the Asian international market. – Source: NRN.

Covid – 19 disrupted the category and then forced to change. What remains? A segment with no shortage of potential . . . .

What Will Food Halls Look Like After the Pandemic?

Traffic at Revival Food Hall in Chicago’s Loop neighborhood hasn’t fully rebounded to its pre-pandemic levels. But people have been steadily returning for office lunches, after-work drinks, and dinners as more workers return to the office and embrace habits of the past.

By March, traffic had nearly doubled over January, when the Omicron variant was spreading across the nation.

“We’re certainly optimistic about it,” says Tim Wickes, director of food hall operations for 16 on Center, which operates more than a dozen restaurants, bars, and music venues.

The hospitality company is so bullish on the post-pandemic potential of food halls it’s opening two more: one in Manhattan’s Chelsea neighborhood and another in The Old Post Office in downtown Chicago.

“More so than ever, folks are yearning for a communal gathering space,” Wickes says. “They want to be around others. They want to see live music. They want to dine out. Just to see those smiling faces back in our food hall again and some of our other concepts around Chicago is special.”

The modern food hall looks nothing like its roots in shopping mall food courts. In recent years, many food halls elevated food and beverage programs to draw in top restaurant brands and chefs. While many were built to foster unique ambiance, nearly all had to pivot to off-premises dining during the pandemic. Like any other restaurant operation, food halls expect that trend to persist.

The draw of a food hall or food court is obvious—the variety. One person in a group can grab a sub sandwich, while another diner picks up an Asian dish. But that generally works best for on-premises purchases.

Now, food halls are working to make all their options available with a single purchase through delivery and carryout, rather than requiring multiple purchases. For Revival, it means a customer can get a salad and a cheeseburger in the same bag by ordering on the company’s app. It’s just part of the brand’s effort to make the food hall experience as flexible as possible.

“We’re trying to deliver that all-in-one experience in the app,” Wickes says. “If someone wants quick grab-and-go food, we can provide that. If they want to watch a DJ play on a Wednesday night, they can do that, too. We really do leave it up to our customers.”

Concept Entertainment Group has taken a similar approach with its Central Kitchen Food Hall. The online food hall, a mashup between traditional food halls and ghost kitchen restaurants, allows customers to pick items from various in-house concepts.

“Really, it’s a combination of the two. It’s virtual brands that we collected in a food hall,” says Keith Castro, vice president of food and beverage for Concept Entertainment Hospitality.  “You can get multiple cuisines all in one check with one delivery fee. And we feel like that’s more advantageous.”

The virtual food hall got started after Grand Central, a Portland eatertainment venue, had shuttered its doors at the onset of the pandemic.

“We had no choice but to really get involved in takeout,” Castro says. “But we realized right away, we’re just one brand but we have the kitchen and capacity to do multiple brands online.”

Over the course of a few months, Concept Entertainment Hospitality created five different brands, logos, and menus. Now, the company operates the virtual food hall from each of its brick-and-mortar Thirsty Lion Gastropub & Grill locations.

As ever, flexibility remains a major advantage of running virtual brands: If one concept isn’t performing too well, it can be easily nixed without risking the up-front costs of building out a full restaurant. Concept Entertainment Hospital learned, for example, that national pizza brand pricing made it difficult for its own pizza concept to compete. So, its pizza brand was dropped.

Castro says the trick is making each virtual brand a standalone success with enough following and brand awareness to rank high on third-party apps. He pointed to the company’s Southern Jewel brand, a fried chicken and Southern food concept that rose to the top.

“If we wanted to, we could probably make a four-wall version of that brand,” he says. “There are quite a few people that never even know it’s a ghost brand at all.”

The company has contemplated the creation of a physical food hall. But Castro worries the traditional model—where each concept has its own kitchen and service area—has become too expensive in terms of operational and real estate costs.

“It takes a lot of work to pull off one of those,” he says. “I think right now we are focused on growing the virtual brands because we can grow them inside the four walls we already own.”

As a diner, Casto says he enjoys the experience of visiting a physical food hall, seeing the variety of choices available and oftentimes finding food at a discount compared to a sit-down experience. But he thinks food halls operating out of a single, central kitchen may be the future of the space.

“I think if you can operate a food hall that has a central kitchen that produces multiple different cuisines and controls quality and execution, I think it’s going to be much more profitable and much more consistent quality of product,” Castro says. “So, I think there’s a future for it. But I think we have to somewhat get a reset.” While food halls were evolving long before the pandemic, many operations still resembled glorified food courts, says Daniel Sweeney, project manager at Atlanta design firm Cooper Carry.

“The pandemic has maybe reset the playing field,” he says, “reminding people why these were popular in the first place.”

What made them popular in the first place was a focus on high-quality foods. At their best, food halls allow customers to discover new dishes from established brands or up-and-coming chefs. Today, the newest food halls are going further, offering more upscale environments to accompany the food.

Retail options are becoming increasingly common inside food halls, as are out-of-the-box additions like manicure and pedicure spots.

Samantha Bennett, associate principal at Cooper Carry, pointed to the Assembly food hall her team designed in Rosslyn City Center, as an example of the future of food halls. That operation, which opened in August 2021, looks more like a luxury hotel’s lobby than a food court. The seating is flexible with distinct areas to sit and linger. And the 29,000-square-foot Assembly features three bar options: a small oyster bar, an outdoor terrace bar, and a larger communal bar.

“We were really trying to create that lounge feel versus a food hall where it’s just communal table upon communal table upon the communal table,” Bennett says. “It’s really calmer and a respite.”

While customers were happy to pivot to QR codes and self-service options during the pandemic, Bennett says they miss traditional restaurant service. That’s why Assembly has a central menu that allows servers to offer disparate items from the food hall’s six different restaurant options.

But even as food halls increasingly resemble fine-dining restaurants, Bennett says a major distinction persists.

“I still think the big differentiator between food halls and fine dining restaurants is the sense of community,” she says. “I think people are looking to gather a little bit more and be part of a bigger, more community-driven experience.”

But some operators still view convenience, speed, and price as driving forces in the food hall market.

That’s top of mind for Local Kitchens, a micro food hall concept that allows diners to mix and match food from its different restaurants. The company was founded by two former DoorDash executives: CEO Jon Goldsmith and COO Andrew Munday along with CTO Jordan Bramble, all of whom aimed at translating the food hall experience into a convenient takeout and delivery operation.

By operating a single, central kitchen, Local Kitchens can maintain small real estate footprints and keep operational costs down. Goldsmith, co-founder, and CEO of Local Kitchens, says that keeps prices down for customers. Menu items at each concept inside the virtual food halls sell for the same price they do at other brick-and-mortar locations.

“Price is a big deal for sure,” Goldsmith says. “The whole advantage of this model is it’s just so much more efficient from a kitchen perspective.”

Rather than creating its own in-house brands, Local Kitchens partners with already successful local and regional brands. Chefs train the staff at Local Kitchens when licensing their brands and maintain an ongoing relationship to ensure quality standards are upheld. That also allows Local Kitchens to leverage existing brand awareness, rather than starting marketing efforts from scratch for new virtual brands.

“Our perspective is there’s already tons of great food out there,” Goldsmith says. “We don’t need to come up with new brands.”

While Local Kitchens storefronts feature dine-in space, they specialize in carryout and delivery orders. Goldsmith says the majority of business comes from carryout orders, which save customers the fees charged on third-party delivery apps. The company has so far opened in suburban locations, where food halls see the most demand for weeknight dinners.

But Local Kitchens envisions future expansion into small towns, urban centers, and suburbia across the country. The 2,000-square-foot layout and the existing technological infrastructure make it easy to expand, Goldsmith says.

“I think we have plans to bring this everywhere—national if not international—and definitely to every suburb and city in the country,” he says.

While Local Kitchens has worked to deliver a new model of food halls to the market, Goldsmith doesn’t see any decline in the traditional food hall. Because those venues serve a different, yet still vital, segment of customers.

“I sort of seeing the world moving toward two ends of the spectrum. On the one hand, you’ve got convenience and on the other hand, you’ve got experiences,” he says. “Post pandemic, there’s probably more need than ever for people to have physical spaces where they can come together and have really great hospitality and really great ambiance. I don’t think that’s going anywhere.” – Source: FSR.

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