A Deeper Dive

Why are some chains easily outperforming their biggest competitors?  This week’s episode of the Restaurant Business podcast A Deeper Dive features Joe Pawlak, the managing principal with RB sister company Technomic, to talk about this topic. Several restaurant chains are easily outperforming top competitors right now. Chili’s is beating Applebee’s. Dutch Bros is outperforming Starbucks and Texas Roadhouse is outdistancing Outback Steakhouse. Pawlak uses data from Technomic to help explain a lot of this. Customers clearly prefer some chains over others right now, and amid intense competition they are voting with their feet.  We discussed what some of these chains are bringing to the table and how much luck plays a role. The discussion offers lessons for some brands as they look to win in a competitive restaurant market. 

The best time to invest in a restaurant chain may be when the industry is struggling. This week’s episode of the Restaurant Business podcast A Deeper Dive features Andrew Smith, the cofounder of the private-equity firm Savory Fund.  We have long wanted Smith on the podcast, largely because of Savory’s unique history. Smith has a restaurant operations background as a franchisee of brands like Little Caesars.  These days, Savory invests in emerging chains. The ifirm has invested in brands like Swig, Mo’ Bettahs, Houston TX Hot Chicken, Pincho, Via 313 and others. Smith discussed his firm’s investment strategies, what they look for and how to tell whether a brand will be a winner or not. He also discussed the right time to exit an investment and why it’s not about time. He also notes that tough times for the restaurant business can be good times to make an investment and explains why that is on the podcast. Check it out. 

What is the right franchising strategy for your restaurant brand? It’s not as simple a question as you may think. And I brought in Sean Thompson, VP of IT with Freddy’s Frozen Custard and Steakburgers, to discuss franchising strategies and what may or may not work for restaurant brands. The number of strategies for franchising a restaurant brand, or any industry for that matter, is as varied as the companies themselves. There are companies that love big operators and those that prefer smaller franchisees and everything in between.  There are also misnomers about franchisees. They are not always local. And they’re not always small.  In any event, we sort it all out on this episode as we talk about what works and what doesn’t and what is the key ingredient in any franchise company. Please check it out. 

Should restaurants worry about weight-loss drugs? This week’s episode of the Restaurant Business podcast A Deeper Dive features Leo Feler, chief economist with the data firm Numerator, to talk about the potential impact of GLP-1 drugs on consumers’ food-spending habits. Drugs such as Ozempic and Wegovy are increasingly popular. The medications are historically used for Type 2 diabetes but were found to cause weight loss. They’ve been used increasingly for weight loss. With nearly half of Americans overweight or obese, they’re expected to only grow in popularity.  Numerator recently coauthored a study analyzing the impact of these medications on sales at grocers and fast-food restaurants. They show a real impact that could influence sales in these industries.  Feler talks about the study and the impact of GLP-1 medications and what restaurants should do to prepare.

Why did restaurants close so many locations last year? This week’s episode of the Restaurant Business podcast A Deeper Dive features Jim Balis, the operations partner with the private equity and debt financing firm CapitalSpring. We had Balis on the podcast to talk about the closures. A lot of companies closed locations in 2024. Many of them ended up in bankruptcy, such as Red Lobster and TGI Fridays. Others have struggled for years. But many of them include brands like Wendy’s and Denny’s that closed locations for strategic reasons.  Closures generate headlines in publications like Restaurant Business. But there are reasons they opt to close locations. We had Balis on the podcast to talk about these reasons. We talk about the reasons companies make these decisions and what issues operators should take into consideration before they opt to close a location. We’re talking closures on A Deeper Dive so please check it out. 

Traffic and value dominated restaurant news in 2024. Unsurprisingly, then, this episode of the Restaurant Business podcast of A Deeper Dive, which features some of the best content from a year’s worth of podcast episodes, focuses mostly on discussions about that very topic.  The first clip features Technomic’s Robert Byrne, talking about consumer frustration over restaurant prices. You can find the full episode here.  The second clip comes from our discussion with Placer.ai’s R.J. Hottovy, in which we also discuss value and why restaurants need to get customers excited about coming in. You can find that episode here.  The third clip is a more broad look at the state of the industry, featuring the National Restaurant Association’s Hudson Riehle, who discusses a wide variety of topics, including some of the issues currently driving the industry. You can find that episode here.   This will be the last episode of the podcast for the year, as we take a break for Christmas and New Year’s Day. But we will return with a vengeance in 2025. Thank you for listening, and you can check out all of our episodes on Apple Podcasts or Spotify.

David Henkes, a senior principal at Technomic and foodservice industry expert, joins the conversation to tackle the unpredictability of emerging restaurant chains. He shares insights into why many fail and highlights the importance of strong unit economics and effective leadership. The discussion dives into the critical role of average unit volumes in sustainable growth, using cautionary tales like MOD Pizza. Henkes also contrasts the paths of Baja Fresh and Chipotle, emphasizing how strategic decisions can make or break a brand's future.

Restaurants have been loading their menus with new items lately. This week’s episode of the Restaurant Business podcast A Deeper Dive is all about menu development, and specifically why so many restaurant chains are turning to limited-time offers to get customers in the door. RB Senior Menu Editor Pat Cobe joins me to talk about that this week.  Here’s a statistic: There were nearly 26,000 limited-time offers in the restaurant industry last year, according to Technomic. That was up 46% from 2022 and 53% from 2019. And, apparently, that hasn’t slowed down this year.  In short, restaurants have broken out of their pandemic-fueled restrictions on new menu development in a really big way.   The reason is simple: Necessity. Restaurants have struggled to generate traffic the past couple of years and were leery of going too deep into a value war.  But there is little evidence that all this development is pulling in more customers. And there are real risks when it doesn’t do that.  We’re talking about new menu items on A Deeper Dive so please check it out.

It’s impossible to kill a restaurant chain, even when it’s dead. This week’s episode of A Deeper Dive features a discussion on a fascinating phenomenon in the restaurant world lately: Operators bringing formerly dead or dying brands back to life. RB colleagues Lisa Jennings and Joe Guszkowski join me to talk about three such concepts: Steak & Ale, Souplantation and Sweet Tomatoes and Ground Round.  Steak & Ale, a Norman Brinker-created brand that was a casual-dining pioneer, recently opened a location in suburban Minneapolis, 15 years after the entire chain was shut down.  Sweet Tomatoes, a buffet concept that was killed in a 2020, pandemic-related shutdown, recently opened a location in Arizona.  And Ground Round—which still has a couple of locations open in the west—is planning a new location in Massachusetts.  Why are these brands coming back? And most importantly, can these chains survive off nostalgia alone? We’re about to find out. We’re chatting about resurrected restaurant brands this week so check it out. 

Church’s Texas Chicken has a new recipe that’s its old recipe.  This week’s episode of the Restaurant Business podcast A Deeper Dive features Joe Guith, CEO of the chicken chain. He joined us for an exclusive look at the company and its growth plans.  Church’s does have some big growth plans. The company wants to get to $2 billion in system sales by 2028, up from $1.4 billion last year.  We talk about what the company plans to do to get to that, including remodels and more digital efforts.  And we talk about the company’s value proposition and its core customer, lower-income diners, and how the chain’s restaurants can profit when it focuses on value.  But we also talk about the company’s chicken recipe, which is its original recipe. Church’s went away from that recipe a decade ago, and Joe explains why the company did that and why the recipe was brought back. Church’s advertising using the term “original recipe” has led to a lawsuit from rival KFC.  We’re talking chicken on A Deeper Dive so please check it out.