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.

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