America’s Casual Dining Sector in Flux as Customers Want Value and Premium

Much like newspapers and malls, the casual dining industry has been on the brink of destruction for what feels like forever. But now, many in the sector are starting to fall off the edge. 

Let’s Stay in Tonight

This week, Hooters — the chain known for its chicken wings and definitely not anything else — abruptly shuttered dozens of underperforming locations. This comes on the heels of Red Lobster filing for bankruptcy and Cracker Barrel CEO Julie Felss Masino calling the country store chain “just not as relevant as we once were.” Meanwhile, TGI Fridays, Applebee’s, and Outback Steakhouse have all cited underperformance for restaurant closures this year. 

Rick Cardenas, CEO of Olive Garden parent company Darden Restaurants, recently told investors the industry is seeing “a little bit of a shift” with fast-food customers opting for casual dining for a better value — “a little bit” being the optimal phrasing. Inflation pains are weighing heavily on Americans, especially when it comes to food costs:

• A survey from market researcher Vericast found that 67% of patrons said the increased cost of restaurant meals is pushing dining out of reach — an uptick from 64% the previous year. And the National Restaurant Association suggested consumer resiliency is starting to wane as restaurant sales reached $93.6 billion, marking a 0.4% decrease from April and the lowest monthly sales volume since October.
• Those high-cost pressures don’t seem to be bothering the wealthy, though, and dining out has become a bit of a luxury. According to Circana data reported by MarketWatch, only diners from households earning more than $200,000 a year visited restaurants more often in 2023 than they did in 2019.

Out With the Old: So how’s a casual, budget chain to stay competitive when diners want value but are also willing to spend more? Perkins — the 66-year-old chain whose previous parent company twice filed for bankruptcy — is rolling ahead with an extreme makeover. This week, the diner announced its rebranding as “Perkins American Food Co.” In addition to remodeling for a more modern look, company president Toni Ronayne told CNN the chain “will continue to evolve and explore pricing in our restaurants.” A fresh coat of paint might be all the sector needs.