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    Restaurants Redefined

  • In search of innovation, some restaurant brands are turning to a model that mixes limited service and full service.

    East Coast Wings & Grill, based in Winston-Salem, North Carolina, is another chain proving the trend is already well under way. By the end of 2010, the company will have opened three on-the-go locations in addition to its 15 full-service establishments, and 10 more are in the works for 2011, says president Sam Ballas.

    “With a lot less capital and a lot less projected operating expense, we want to niche into [new markets] with a kind of ‘Mini Me’ of East Coast Wings & Grill,” Ballas says.

    East Coast Wings’ approach to mixed service is different than Mama Fu’s in that the on-the-go locations are housed in separate buildings altogether than the full-service locations. The strategy is the result of two years of market research, Ballas says, and the goal is to help area developers grow by introducing East Coast Wings into two market segments.

    Ideally, franchisees would first open a full-service location and then branch out into the same area with a quick serve about six months later. If some operators do not want to open a full-service establishment at all, then they would have to contract for multiple on-the-go locations.

    Ballas says he was spurred toward the new concept by franchisees who wanted to expand but had only limited access to credit. He felt that the relatively low cost of opening an on-the-go (about $270,000) compared with a full-service East Coast Wings, which ranges between $450,000–$500,000, would make it an attractive option in a bad economy.

    Technomic’s Tristano says this gets to the heart of the mixed-service trend.

    “A lot of restaurants are recognizing that they can serve more profitably if they do it in a smaller-square-footage platform,” he says. “They’re looking for more to-go and catering opportunities where customers are purchasing but eating off the premises.”

    After a decade of exponential growth in the industry, both in locations and seats, many restaurants are starting to scale back, Tristano says. Fast casuals that have traditionally utilized 3,000–4,000 square feet are shifting down to less than 2,500 square feet. The Cheesecake Factory, known for its expansive, 10,000-square-foot interiors, has introduced an 8,000-square-foot prototype as it goes after new markets.

    “A primary driver of that is the recession,” Tristano says. “Restaurateurs have to streamline their operations in order to remain competitive today, or even to remain open.”

    Pizza Inn, based in The Colony, Texas, represents yet another iteration of the mixed-service trend. The company has 50 express locations in travel plazas nationwide. Pizza Inn had offered a quick-service option until a few years ago, but then it went away from the business. Now the company has renewed its commitment, says Madison Jobe, senior vice president and COO.

    Featuring a smaller menu than its buffet restaurants, Pizza Inn’s express locations are specifically tailored to customers who are on the move.

    “The more variety you have, the more difficult it is to execute,” Jobe says. “Someone is not looking to get a tank of gas and wait around for a Buffalo Chicken Pizza or some of the other specialties we offer at our restaurants. Most people are going to be looking for a cheese pizza or a pepperoni pizza.”

    Unlike with Mama Fu’s, full service is still the core of Pizza Inn’s business, and there is no franchisee crossover between the company’s express and full-service concepts, as with East Coast Wings. But Pizza Inn sees a lot of potential in the quick-service sector and is planning to increase the number of express locations in the 17 states where it operates.

    “We are limited only by the number of opportunities in those states,” Jobe says.

    As with any trend that has caught on during the recession, the question of whether it will persist when the economy improves remains. But as more and larger restaurants continue to warm to the mixed-service model—Denny’s, for example, introduced its own quick-serve concept, the Fresh Express, earlier this year—analysts are predicting the concept has legs.

    Ed Doyle runs RealFood Foodservice Consulting, which is geared toward full-service operations, with offices in Boston, New York, and San Francisco. With several of his clients recently rolling out quick-service iterations of their core full-service brands, he says the strategy is “all about creating multiple impressions” while limiting capital expenditures.

    “Full-service restaurants are looking at how to manage their expenses a little better,” says Doyle, whose Boston-area client Ole Mexican Grill has launched a take-away concept called Olecito. “They want to broaden their reach to the consumer and still not really have to expand their infrastructure that much.”

    Far from confusing consumers, the mixed-service model presents an opportunity to strengthen brand loyalty, Doyle says.

    “It creates different opportunities to touch your customer, and every time you touch a customer you’re owning them more and more,” he says.

    For Technomic’s Tristano, the rising popularity of mixed-service establishments is a logical evolution of the restaurant industry in an increasingly mobile and fast-changing world.

    “What we’ve learned at least over the past decade, if not over the longer history of the restaurant industry, is that giving the customer more options is always a benefit and will always be appealing,” he says. “Whether it’s Denny’s doing pick-up windows, or Panera doing drive thrus, or Mama Fu’s adding mixed service, more options are always going to provide greater flexibility and a broader range of appeal for customers looking for something different.”

    And, Tristano says, there is another advantage to full-service restaurants introducing smaller-scale quick serves.

    “Part of the benefit of having a smaller platform is you look busy,” he says.