By Megan Rowe
HOME AND AWAY: McCormick & Schmick's is building units to attract loyal business travelers when they're back home.
TESTING, TESTING: Darden is researching the viability of healthy grilled fare before rolling out its Seasons 52 concept nationally.
HEAVY HITTERS: In a short time, Bravo and Brio have become preferred anchors for new lifestyle center developments.
SLICK SURROUNDINGS: Legal Sea Foods upgraded interiors to keep up with its clientele.
Everybody wants to be the next Cheesecake Factory. And why not? Just one of its units—admittedly one in a high-traffic tourist destination—racked up $19 million in sales and averaged 4,000 guests a day in its first year. Guests put up with long waits to get their hands on the 16-page menu. The advertising budget is zip. Thanks to a public offering, the chain has expanded from its original 4 units to 88 in 12 years.
Any number of upscale casual concepts bidding to grab a piece of the cheesecake have cropped up in recent years and carved out their own followings. P.F. Chang's bulked up and sanitized the Chinese restaurant experience and successfully transplanted it to 115 nontraditional (for Chinese restaurants) locations across the country, with more on the way. Legal Sea Foods long ago graduated from its sharedpicnictable roots to classy interiors and better check averages. Houston's and J. Alexander's have built their own solid niches, despite maintaining a low media profile.
Clearly this is a segment to watch, especially if you're an independent restaurant operator seeing your business slip away to the happening new place down the street.
What is so appealing about upscale casual dining?
"The highest quality growth has come from brands able to tap into changing long-term consumer preferences to highquality dining experiences," says David Geraty, managing director and senior restaurant analyst with RBC Capital Markets, Minneapolis. "People have been taught to want better and higher quality and a better type of dining experience." He says Cheesecake Factory, P.F. Chang's and Outback's brands have done a particularly good job of satisfying this demand.
For many consumers, classy casual restaurants represent an affordable luxury that they can easily justify: Nice surroundings, good service and high-quality ingredients add up to money well spent. It goes a bit deeper than that for many, says Ira Mayer, publisher of "Mayer on Marketing," an e-newsletter. "Everyone is sort of aspirationally upscale," he explains. "No matter what level you're at, no one aspires to go down." By paying a bit more attention to product packaging—impressive entrances, high-quality finishes, professional and attentive service—these restaurants "give you that feeling that you're moving up," he reasons.
With lavish and dramatic interiors borrowed from the pages of the most over-the-top Las Vegas hotel designs, this relatively young breed of restaurant is capturing the fancy of a mainly middle-aged, somewhat affluent guest base.
Restaurants in this space have also help their cause by locating on convenient, high-traffic sites and creating menus with broad appeal. Long waits for tables don't seem to faze their fans, who are happy to take a pager and go shopping at the nearby lifestyle center. Crowds are good for business.
"Consumers have the impression that if a restaurant isn't busy, it isn't a good place to eat," says Darren Tristano, managing director for Technomic Information Services in Chicago. If they don't want to shop while waiting, many are happy to have a drink. "At a lot of these locations the bar is doing very well," he adds.
Are elegant casual restaurants robbing business from independents? "Probably what's happening is consumers are eating out more of late," Tristano says. Mayer agrees.
"People are spending a bit more again and trying to feel better about things. One of the things you do to feel better is eat." Where do they go to feel better? Check out these concepts:
The New Kid: Seasons 52
DARDEN RESTAURANTS IS IN NO BIG RUSH TO ROLL OUT SEASONS 52, the concept it's now testing for eventual national expansion. Blaine Sweatt, president of the brand and of new business development for Darden, says the company has tentatively identified 250 sites that would probably make sense for the concept, a health-conscious chain dishing up "rustically prepared progressive American cuisine."
The target audience for the grill and wine bar concept is pretty broad: Originally it was to be affluent, well-traveled, educated 35- to 50-year-olds. "But we're finding it reaches above and below that," Sweatt says. Healthconscious younger and older diners are visiting the open Seasons 52 units.
"Rustic" means most of the food is cooked in a display kitchen over an oak or mesquite fire, relatively unadorned and lightly seasoned. No menu item, including entrees and desserts, adds up to more than 475 calories. "We shoot for a balanced plate: A protein, a complex carb of some sort and a vegetable," Sweatt explains. In case someone has more specific nutritional questions about a dish, servers tote handhelds (also used for ordering and payment) with nutritional breakdowns on the entire menu, which changes weekly. Sweatt won't disclose the check average, but most entrees are priced in the midteens and appetizers are under $10. He won't discuss unit sales other than to say Darden is "happy" with them.
The three existing Seasons 52, all located in Florida, range in size from about 200 seats and 7,000 square feet to 260 seats and 8,500 square feet. They feature a full-service piano bar and a wine list with more than 140 bottles, including more than 70 wines by the glass. The interior is intended to set a casual but sophisticated adult tone, with an open, warm, residential feel. This year, Darden will open additional test sites at two more Florida locations and in Atlanta.
"We want to try it in different trade areas," Sweatt explains. Those include freestanding sites, urban locations and destinations. "Not all of them will work equally well, but we want to find the ones that do the volume. We really want to kick the tires," he says. The company will use the time to toy with the menu and the size of the restaurants as well. "Until we're really sure it's got legs, we'll keep it as a test concept," Sweatt says.
The Old Timer: Cheesecake Factory
WHY ARE CROWDS WILLING TO PUT UP WITH 30- OR 60-MINUTE WAITS at The Cheesecake Factory? "It's really more than one specific thing," says Howard Gordon, senior vice president of business development and marketing for the 88-unit Calabasas Hills, CA-based chain. "Our main goal is to make sure to give guests an experience that has them continue to come back and be our word-of-mouth advertising." In 27 years, he brags, the company has never spent a dime on ads.
The key, Gordon says, is a combination of eclectic décor, great locations with easy access (and free parking) and huge portions of food at reasonable prices.
Interiors feature Italian marble, cherry banquettes, Egyptian columns, hand-blown glass lighting fixtures, hand-painted murals and high ceilings. The idea is to create a memorable ambiance that repeat customers won't find boring.
Gigantic portions are ordered from an equally hefty 18-page menu including 4 pages of specialty drinks, more than 200 food choices spanning the ethnic landscape and about 40 desserts. Cheesecake Factory is known as the "no veto" restaurant: Every member of even the most diverse group knows he or she will be able to eat there.
Food is freshly prepared, and food costs—despite the big plates—are among the lowest in the business, Gordon says. "We have been able to have great contracts with companies with regards to chicken, seafood, beef and produce, and we've passed that along to our guests."
Cheesecake Factory interiors are generous—ranging from 5,400 to 17,300 square feet, with an average of 350-400 seats. Checks averaged $16.60 last year.
Cheesecake Factory's success, Gordon says, depends on keeping current. "We've always looked at how we can stay ahead of the curve in keeping our guests interested, and we've been successful."
Viva Italiano: Bravo and Brio
BOTH OF THESE BRANDS, CREATED BY COLUMBUS-BASED Bravo DEVELopment, are high-energy, impressively appointed theme eateriesoffering Italian food prepared using authentic cooking methods. They are designed to appeal to a broad base of guests—from business associates to families, young professionals and empty nesters.
While the menus are similar, Bravo's décor suggests an authentic Italian piazza café—fragmented Corinthian columns, granite counters, bentwood chairs and peeling whitewash-stained stucco walls. Pastas, pizzas and other Italian specialties are prepared exhibition-style. Brio, on the other hand, is designed to resemble a Tuscan country villa. Large portions of steaks, pasta, flatbreads and pizza are prepared in an authentic Italian wood-burning oven. Both average 7,000-8,000 square feet and 190-220 seats, with bars seating 20-30.
Check averages at Bravo are $15 at lunch and $20 at dinner; at Brio, they are $17 at lunch and $27 at dinner. Guest recognition is a big focus in training, and it seems to pay off. "It's hard to measure, but we do have a lot of regulars, and our regulars probably eat with us once a month," says Rick Doody, CEO.
Both concepts are going up in affluent urban and suburban locations, often adjacent to a Cheesecake Factory, P.F. Chang's or Houston's. By the end of 2004, Bravo had 25 units, Brio 13; the company expects to add 10 more of the two brands combined this year, and 8-10 a year after that. The company invests about $1.2-$1.5 million to develop a site, with total investment (including landlord allowances) of $1.8 million to $3.5 million, including the capitalized lease value of the property.
It's not just a coincidence that Brio and Bravo are so often located near their upscale casual competitors. All these brands are now considered anchors for new mixed-use developments such as lifestyle centers, and developers often prefer to choose one from column A, one from column B, etc.—meaning a steakhouse, an American restaurant, maybe an Asian and an Italian place. Doody says Brio and Bravo are now developers' first choice for Italian.
Changing with the Times: Legal Sea Foods
THE HISTORY OF LEGAL SEA FOODS PROVIDES A LESSON IN THE EVOLUtion of casual dining. Company chairman Roger Berkowitz, whose family started in the business in the 1950s with a fish market, then launched a casual restaurant in 1968, provides this perspective: "In the old days you could get away with doing high-quality food, then service became an important aspect, then the dècor as well. And people want everything for the same price point."
Legal Sea Foods long ago branched out from its original Cambridge, MA location, where guests ate fried or boiled fish from paper plates at shared picnic tables, to a chain with 30 locations with capacities ranging from 120 to 400 seats. The interiors and service levels have evolved to keep up with a more sophisticated and demanding clientele. Berkowitz won't say exactly what it costs to build a new restaurant, but "the investment is huge—maybe double what it was five years ago," he admits. "The cost of materials has gone up, and you have to keep wowing people. You can't just have a functional dining room with great food."
Baby boomers, health-conscious diners and families make up the customer base for Legal. They spend an average of $23-$38 at lunch and dinner combined.
Legal has kept a lid on costs and prices through steps such as carefully scheduling deliveries of product and developing relationships with contractors so each new project doesn't require reinventing the wheel.
And, while the original fried items are still popular, the menu has evolved with the times as well to include popular items such as calamari and mussels as well as more steamed and grilled items. "You have to keep evolving," Berkowitz adds. "You can't keep doing what you were doing 10 years ago."
Catch of the Day: McCormick & Schmick's
CHOICE IS THE DRIVING INFLUENCE BEHIND THE MENU AT MCCormick & Schmick's Seafood Restaurants. Menus offer about 80 items, mainly seafood, but also steaks. "We give the consumer the choice of spending $7 or $70," says Saed Mohseni, CEO of the 52-unit Portland, OR-based chain.
The target audience for McCormick & Schmick's, as it is for the average upscale casual establishment, is affluent baby boomers—as he describes them, "people who go out more and spend more when they're out." Increasingly, Mohseni says, this group is drawn to restaurants offering fresher and lighter product. "We also have a very active bar, which attracts upandcoming younger professionals," Mohseni adds. That group will visit for cocktails or special occasions.
Those boomers are loyal: Mohseni says the average guest visits twice a month. "We have a lot of repeat business because the menu offers something for whatever mood you're in," he explains. They spend an averge of $21 at lunch, $42 at dinner.
Popular among business travelers, McCormick & Schmick's have been located primarily in high-profile urban settings, but more are landing in the suburbs to capture those travelers at home. An area must have about a half-million residents to qualify. "We need to do a certain volume because the restaurants are large," Mohseni explains.
The average restaurant seats about 250 and posts mean unit sales of about $5 million. It costs $2.4 million to build a typical McCormick & Schmick's, combined with $300,000 in opening expenses and about $1 million in tenant improvement funds.
Mohseni says the design is "timeless—from day one it looks like we've been there." The illusion gets some help from the fact that about half of the company's restaurants are housed in designated historic buildings.