All about business

For more than 40 years casual-dining operations of all stripes have enjoy incredible growth and success. Starting with restaurants like Red Lobster, Steak & Ale, and T.G.I. Friday this segment of the restaurant industry has carved out a dominate role in hospitality and a warm spot in the hearts of Americans. Casual restaurants like Olive Garden and P.F Chang's have introduced millions to approachable interpretations of foods and cultures that weren't available in many locations. The segment, as a whole, has provided countless hours pleasure and escape from the daily grind.

This is exactly why a recent article in Nation's Restaurant News caught my attention. The article, by 35-year industry veteran and training expert Jim Sullivan, offered an interesting take on the future of casual-dining. Mr. Sullivan draws a striking parallel between the economic events of the 1970's, that helped give birth to the casual-dining segment and today's dramatic economic changes affecting the segment. He rightfully, points out that this is in no way a run of the mill "downturn", where things go back to normal in 18 months or so. Instead, the segment is likely to see a shakeout unique from anything seen since the birth of casual-dining. This begs the question, what is that will it take to survive in this "New Order"?

Two points have to be made to keep such a discussion in perspective. First, the long-term outlook for casual-dining is quite positive. There are now two generations of American adults who have grown up in dual income families, where casual dining is a treasured activity. Secondly, major operators like Darden Restaurants, Buffalo Wild Wings, and Brinker International, have weathered the initial stages of the current "downturn" well. Their results support the opinion that we are not talking about a dramatically shrinking segment; rather one that may not enjoy the exceptional growth of the recent past.

With this said, there are legitimate challenges to casual-dining's long dominance. The Fast-casual, Family-dining, and Quick-service segments are making obvious efforts to woo potential casual-diners with updated menus, decor, advertising, and discounts. For example, there is very little daylight between Panera Bread's current decor package and many casual-dining operators, IHOP continues to push dinner, and Pizza Hut has started delivering pasta entrees.

If this were not enough, food retailers are also aggressively getting into the game. Whole Food's now have seating areas, Kroger's supermarkets sell heat-and-server molten lave cakes, and Bertolli television ads claim their pasta entrees are "Restaurant Quality". I think the fancy economic term for all of this is "Increasing availability of substitutions". What ever you call it, it can't be good for casual-dining operators, who don't differentiate themselves in the future.

Looking back just two years ago to the good-old-days of casual-dining, none of this meant much. Anyone with an "A" site, "Me Too" menu, and cute ads, could expect solid guest traffic. With housing subdivisions and adjacent commercial space sprouting up like wild mushrooms across the country, along with, historically low unemployment and easy credit; respectable growth was almost certain. Now in a re-setting economy, characterized by an imploded housing market, high unemployment, and tight credit; operator will have to adapt to survive and thrive.

Given the radically changed environment, I believe the casual-dining leaders of the future will be those with the courage to drive innovation, the discipline to drive execution, and the resolve to manage change.

Jim Collins author of Good to Great, recounts the story of James Stockdale in his best selling book. Vice Admiral Stockdale was a prisoner of war in Vietnam. He attributes his survival under harsh conditions to his solemn belief that he would make it home eventually. When asked which captives did not survive, he said surprisingly "The Optimists". "The optimists kept expecting to be rescued by some predicted date... when these dates came and went they lost hope and died of broken hearts". Like Vice Admiral Stockdale, the casual-dining winners of tomorrow will be those who except the brutal reality of this new day and plow through regardless of the length of the challenge.

Shed Wallace is the founder of www.EateryCoach.com and the www.EateryTribe.com blog. His career highlights include culinary and food & beverage director roles with leading hospitality companies like Darden Restaurants and Royal Caribbean Cruise Line.

Article Source: ArticlesBase.com - Casual Dining: Who will win the looming battle for consumer dollars?