What if you could provide fair-priced meals in a comfortable setting? Better, what if you could establish a brand where your restaurant could instantly attract walk-in traffic?
You would have a winner, right?
In the 1980s, Chili’s, AppleBee’s, California Pizza Kitchen, TGI Friday’s, and Bennigan’s made their nationwide expansions. Today, you will find these restaurants in malls and neighborhoods in San Bernardino, Albuquerque, Augusta, St. Paul, Providence, and pretty much any town big enough for a Walmart.
Look out over the horizon. Dark clouds are forming over these perennial brands. You need only look beyond the fading signs of the abandoned Sears and JC Penney’s stores to see the ominous signals.
Technology, speed, labor, and real-estate costs are head-winds threatening to blow away these casual-dining establishments. The future is fast-casual. The below table shows how casual dining and fast-casual match up.
Let’s detail the fast-casual advantages.
- Construction cost and flexible work-space. When building out a casual dining restaurant, the floor plan is highly specific. If you go to a Chili’s or Applebee’s, the restaurants chains will be familiar for different locations. The classic building is often a square-shaped structure. Often the building is a stand-alone unit with a large parking lot encircling the restaurant. In contrast, a store like Subway, Chipotle or Panda Express can occupy a variety of retail configurations, including narrow strip mall spaces. So long as there is enough room for the food-build station, fast-casual restaurants can move in and setup shop.
2. Staffing costs. Hiring, scheduling, payroll and training for waiters and waitresses is challenging for a casual-dining establishment. The fluctuations in customer traffic is devilishly hard to predict. Overstaff and the junior wait staff ends up being sent home early. Understaff and lose potential customers as long wait times send customers to other dining alternatives. Fast-casual can operate with a high customer-to-staff ratio. The key for fast-casual customer throttling is to keep the line moving…fast! A slow order process, order fulfillment, or payment process will create order bottlenecks. Long order queues keep customers away and defeat a key fast-casual efficiency advantage. Master the line efficiency and fast-casual can turn around far more tickets during peak lunch and dinner hours than its casual-dining counterparts.
3. Order Session. The casual-dining experience looks like this:
a) 1st Table Visit. Waitress takes drink orders.
b) 2nd Table Visit. Waitress delivers drinks and takes meal order.
c) 3rd Table Visit. Waitress delivers food (if appetizers are ordered, add one more food delivery step).
d) 4th Table Visit. Waitress refills drinks and checks on the order.
e) 5th Table Visit. Waitress asks if the customers want dessert or just the check. If dessert, add another food delivery and check presentation step.
f) 6th Table Visit. Waitress takes the payment and makes change or runs the credit card.
For a fast-casual, the order is taken and paid for at the counter. As a bonus, a split ticket is simple. The ticket corresponds to the person or group ordering, not on how many different parties are sitting at one table. If the food is not being made on demand, the customer takes away an order number. A food runner delivers the food to the table, or the customer’s number is called so the customer can collect their order at the take-out station.
The customer self-services their drinks, refills, napkins, utensils and condiments at a central station.
4) Table turning. As shown in step 3, the customer to service-staff interaction is greatly streamlined in the fast-casual experience. This translates into a shorter visit and faster table-turn for the fast-casual establishment.
With the pre-payment of the meal, the payment step is eliminated from the process. Since many fast-casual have limited indoor seating, customers will often take their food to go or eat al fresco.
5) Tip and service. Let’s not neglect to recognize the good work that hard-working wait-staff professionals provide. Waiters and waitresses can make for a more memorable and satisfying dining experience. These professionals can offer valuable menu advice and provide a fun, interactive dining experience. We can agree that singing “Happy Birthday” to yourself in a restaurant doesn’t quite work.
There are times when sitting down and letting a waiter take care of the order placing, drink corralling, and payment processing is desired. As often, time is limited. The objective of spending time with friends or family can be impaired with an overly attentive waiter. A deep discussion with a friend is interrupted by a well-meaning waiter wanting to service the table.
I am all for tipping for service. 18% is a good way to provide a thanks for the service effort. However, being frugal, I often prefer a self-service, fast-casual experience when the wait personal in unnecessary. It is great that waiting tables can provide a decent income for a service professional. The problem is that fast-casual is offering a compelling customer experience that works perfectly well without the extra overhead.
6) Cash management. Cash is king. Understandably, people wants to be near the king. This means that cash-based businesses are particularly prone to internal theft issues. With fixed cash stations and a smaller set of personal having to handle cash and credit cards, the likelihood for misappropriation of funds and credit card numbers is lessened.
Restaurants have security cameras to video record their tills and discourage unexpected withdrawals. Central cash management is less prone to oddities compared to when cash is flowing all around the tables and restaurant, as is the case in most casual-dining establishments.
7) Streamlined menus. Fast-casual tend to take the KISS (keep it simple) philosophy to their menu. Why? Speed. They need to push people through the lines fast. By having a limited menu, the order process is quick, as is the food build time.
The added benefit of the concise menu is simplified food inventory and preparation. There are less menus items to train chefs to prepare, and less inventory to store and that can spoil. Since the ingredients are limited, the food materials should be rotating regularly. As a result, the ingredients should stay fresh.
8) Minimum wage laws. The NRA (the other one, the National Restaurant Association) has been fighting to keep minimum wages low, and also to maintain a special “waiter” classification. These minimum wage laws are coming under pressure from well-meaning activists. The problem is that an increase in minimum wage, and especially the waiter minimum wage rules puts massive pressure on casual dining establishments. Automation and fast-casual growth will accelerate in regions where minimum wages are increasing fastest.
9) Automation. Automation and automatic payments are moving from quick-service (aka fast-food) up to the fast-casual and casual dining segments. Applebee’s, Red Robin’s and Chili’s have been trying to take the pain out of the check payment process. iPads and tablets are serving as pay-at-the-table solution. These solutions help, but these after-the-fact technologies are bandages on the larger problem.
Summary
Casual dining has been playing in the middle of the road for decades. At the entry point, fast-food is dominated by giants. These mega-corps have used economies of scale to drive cut-throat deals with food suppliers. They have also invested heavily in food prep automation and robots to ensure a consistent product. They have mastered an efficient order and payment process to keep the order times down to a turn-around time measured in seconds, rather than minutes. At the high-end, fine dining commands high per-dinner prices to offset the labor and time-intense experience. Fast-casual is the mack-truck accelerating down the middle of the road. Casual dining is stuck without an exit above or below. Some of the casual-dining establishments will hang on, but the weaker brands will end up road-kill.
