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Business Makeover: Casual Dining


If it's broke, fix it.

Operating a casual dining restaurant in this sluggish economy can be tough going.

For proof, look no further than Bennigan's. In late July, parent company S&A Restaurant Corporation filed for bankruptcy and shuttered all company-owned locations. And just last week, Cheesecake Factory (CAKE) had its rating cut from Buy to Neutral after analysts determined that in order to stay competitive, what money the chain didn't throw at marketing, it would have to leave on the table with discounted prices. Darden Restaurants (DRI), proud owner of Olive Garden, has also had a rough go of things; it cut full-year guidance in August.

The message is clear: Deep-fried treats are no match for belt-tightening.

The question's even clearer: As once-loyal patrons thumb their nose at the Awesome Blossom and opt to stay home, what can restaurants do to increase foot traffic?

Some of the most successful, identifiable dishes have wacky names. Think of Denny's (DENN) Moons Over My Hammy, or IHOP's (DIN) Rooty Tooty Fresh & Fruity. Restaurants would do well to list old menu standbys like the burger and fries as the "Moo Meat Sandwich" with "Krazy Tat-O Sticks."

Customers appreciate a friendly waitperson that sits down beside them when taking their order. Increase that level of intimacy by having the server remain throughout the meal, accompany patrons on the way home and rent out their guest bedroom for the next few years.

You can't overstate the importance of decor in casual restaurants, but the retro style of Johnny Rockets and the ecological wonder that is the Rainforest Cafe (LNY) require substantial upkeep. Consider the more cost-effective concept of the "Greasy Spoon," where food is cheap, cleanliness is lax and health code violations are rampant.

One reason casual restaurants have struggled is their total lack of exclusivity. Chains can conjure that velvet-rope mystique by implementing a mandatory 45-minute wait for seating.

For chains that try to project an image that's young and edgy -- Hard Rock Cafe, for example -- the act has grown tired and antiquated. Ratchet up the cool factor by replacing the classic memorabilia with hipper fare, like Fall Out Boy's legendary Teen Choice Award.

Bring back the Automat. Worked in the Depression-era Bronx. Would totally work now.

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