Restaurant Industry Insights

How Do Restaurants Make a Comeback?

In an earlier earnings call in 2024, Dine Brands, parent company to Applebee’s, announced they’d allow franchisees to close up to 35 unprofitable locations in 2024. These closures follow the 46 that shut their doors in 2023. Their goal? To return the struggling restaurant concept to growth. 

Some of their comeback strategies include combining two brands into one location, in particular IHOP and Applebee’s, saving the company money. They’re also looking to reduce costs in the BOH with automation and choice of equipment, enabling a smaller footprint.

They’ve enhanced their website, app, and customer experience when ordering. They’re retaining the promotional items that spurred interest, even those dating back to 2017, like the Dollarita. This promotion attracts new customers and the younger crowd and results in about 94% of guests ordering a menu item with their beverage. 

In 2023 Q4, limited-time offers amounted to 19% of Applebee’s transactions, according to Nation’s Restaurant News. As the growing price sensitivity continued, their commitment to a value-driven menu worked in their favor. In March 2024, customer traffic jumped by 3.8% year-over-year. Despite this rise, same-store sales declined by 4.6% year-over-year in 2024 Q1.

According to an interview with Restaurant Dive, John Peyton, CEO, suggested the falling traffic was the main reason for the decrease, with guests making less than $50,000 reducing their visits or spending. In Q1, LTOs made up about 28% of their orders. Like many in the casual dining sector, Applebee’s has seen its share of challenges and comebacks, continually changing their game and fighting to stay relevant.

So, if a large brand with over 1,600 locations in 14 countries is losing ground, is it possible to stage a comeback after getting into financial trouble? 

Restaurant Chains Coming Back After Going Broke

Fortunately, the answer is a resounding yes. While the road may be uphill and windy and not without setbacks, restaurants are making remarkable comebacks even after bankruptcy. As Aisha Tyler said, “Success is not the absence of failure; it’s the persistence through failure.”

Here’s one of the brands that persevered despite major setbacks.

  • California Pizza Company: With about 50 locations that didn’t provide off-site dining, the pandemic hit this brand particularly hard, ultimately forcing it to file for Chapter 11 bankruptcy. With no qualified buyers, they emerged on November 23, 2020, with $220 million in debt off their books, ready to rise from the ashes. According to Mashed, part of their revitalization strategy includes expanding their off-premise options, technology investments, and menu innovations. They launched a domestic franchise program and opened international restaurants in Chile and Costa Rica. To say they’ve been busy repositioning their business for long-term growth and success would be an understatement.

Additional brands to make a comeback include Dave & Buster’s, Steak and Ale, and Bennigan’s.

Simple Yet Successful Strategies

Sometimes, it’s the simple things that mean the most in life. Here are a few of those not-so-profound time-tested strategies to help increase brand awareness and customer loyalty. 

  • Visibility: Make sure your website is optimized, and your restaurant comes up on a “Restaurants in (your city)” search.
  • Online Menu: Many potential customers will check out your menu online before heading to your establishment. In fact, an incredible 94% of millennials explore online menus before dining out. Search engines like Google look for keywords, which is much easier on a text-based menu than on a PDF. 
  • Adjust Recipes and Calculate Food Costs: Monitoring expenses and profits in real-time ensures you’re optimized for success. One of the biggest failures in restaurants is not keeping a watchful eye on the numbers until it’s too late.

FAQS

What is the number one reason restaurants fail?

Like other industries, several factors usually contribute to a restaurant’s demise. These factors include inexperience and low-profit margins worsened by inattention to the numbers, such as cost of goods sold, labor costs, and the break-even point. Poor food quality and bad service due to long wait times or inattentive servers will result in one-time customers who don’t return, a certain death for restaurants.

What is the number one reason customers do not return to a restaurant?

Loyal customers are essential to a successful restaurant. Some of the main reasons for not retaining customers include poor service, inconsistency, lack of cleanliness, and food that’s not particularly memorable. On the opposite spectrum is service that’s timely, attentive, and friendly; food that’s always memorable; and a sparkling clean restaurant, including the dining area, restrooms, and outdoor landscape spaces.



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