Nation's Restaurant News On the Go #97
Nation's Restaurant News
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Q3, we hardly knew ye
Executive editor Alicia Kelso here. We’re almost to the finish line for third quarter earnings calls (Jack in the Box is one of the few brands yet to come) and that means we have a bunch of transcripts on our desks riddled with highlighted passages in an honest (albeit ambitious) attempt to understand themes that may have emerged in the past three-plus months.
One such theme that stood out was the quickly evolving value environment throughout the quarter.?“Value,” for all intents and purposes, is no longer defined as just discounting, but rather a holistic approach to abundance, experience, speed, accuracy, etc. We ended up here because the industry began losing customers at the end of 2023 after several quarters of aggressive (in many cases over-aggressive) price hikes.
That traffic erosion picked up in earnest in Q1 and shockingly continued through Q2, so Q3 became a sort of chickens-come-home-to-roost moment. But, as we learned through the reporting cycle, not all value propositions are created equally and several brands had to adjust their approach midway through the quarter because their specific messaging wasn’t sticking.
That said, some of those adjustments may be paying off, as another theme that emerged through this latest earnings round was “sequential improvement.” Many, if not most, public companies reported such improvement for both traffic and sales toward the end of Q3 and into Q4. Indeed, new data from Revenue Management Solutions shows that quick-service traffic turned positive in October for the first time this year (up 2.8% year-over-year).
It’s been a long time coming, but we’ll certainly take some good news. Here’s hoping the trends continue.
Cracker Barrel reports positive same-store sales for second quarter in a row
Is Cracker Barrel’s long-term strategy of modernization and barbell pricing already working? For the second quarter in a row, the Lebanon, Tenn.-based casual-dining company has reported positive same-store sales, according to its preliminary earnings released on Thursday for the first quarter ended Nov. 1.
Cracker Barrel reported a quarter-over-quarter uptick in same-store sales, from a modest increase of 0.4% in the fourth quarter of 2024 to 2.9% for the first quarter of 2025. The company also reported positive revenue growth of 2.6% to $845.1 million, making it the second quarter in a row of positive revenue growth as well.
"Our fiscal year is off to a strong start, as our strategic transformation plan continues to take hold and helped deliver financial results that were in line with our expectations,” CEO Julie Masino said in a statement. “Additionally, we are pleased that our comparable store sales and traffic results outperformed the casual dining industry.”
Cracker Barrel’s same-store sales this quarter outperformed almost all other casual-dining brands, including BJ’s, Bloomin’ Brands, Cheesecake Factory, Red Robin, and Dine Brands.
CAVA shows no signs of slowing momentum
CAVA once again bucked industry-wide trends in the third quarter, turning in a same-store sales increase of 18.1% driven largely by a 12.9% increase in traffic.
Further, average unit volumes grew to $2.8 million, from $2.6 million in Q3 2023, while restaurant-level profit margins grew to 25.6%, from 25.1% in the same period a year ago.
During the company’s earnings call Tuesday after market, chief executive officer Brett Schulman said a “confluence of factors are coming together to fuel growth,” including CAVA’s position as a “category-defining brand,” a compelling value proposition, and a focus on execution.
Mediterranean cuisine, he added, is poised to be America’s next major culinary category and is “meeting the moment.” Indeed, Technomic reported that Mediterranean cuisine was one of the fastest-growing segments with a growth rate of 9.5% from 2017 to 2022.
Red Lobster revamps menu with seven new items and the return of hushpuppies and popcorn shrimp
Red Lobster has rolled out a new menu with additional pasta, soup, sides, and seafood entrées as well as the return of hush puppies and popcorn shrimp, the Orlando, Fla.-based casual dining chain said Tuesday.
Click below for more details on the new menu.
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Applebee’s launches $9.99 Meal Deal as part of its value refinement strategy
During the third quarter, Applebee’s executives acknowledged missing the mark amid tough conditions, including and especially a “noisy” value environment. The chain reported a same-store sales decline of -5.9% in Q3.?But, as John Peyton, chief executive officer of parent company Dine Brands, explained, Applebee’s is working to refine its strategy and is doing so largely through adjustments to its own value offerings.
“Our learning is that we've got to meet guests where they are and the guest definition and expectation of value shifted over the last couple of quarters. They started to focus on the total cost of the meal and … It became clear that guests want to know the total cost of dining in a restaurant for argument's sake – the cost of your sandwich plus fries and a drink,” he said during Dine’s earnings call last week.
In response to this shift, Applebee’s launched a Pick 6 promotion in October and is now introducing a Really Big Meal Deal – the choice of the chain’s new Big Cluckin’ hand-breaded chicken sandwich or Big Classic Bacon Cheeseburger with fries and a fountain beverage for dine-in, to-go, or delivery for $9.99.
“Big in size, flavor, and value, our new Really Big Meal Deal can’t be beat,” chief marketing officer Joel Yashinsky said in a statement. “From Classic to Cluckin’, our Really Big Meal Deal offers guests variety, with both a savory hand-crafted burger and new hand-breaded chicken sandwich, served with classic fries, and a fountain drink for only $9.99. We know our guests are going to love this unbeatable value meal.”
We can likely expect more such meal deals from Applebee’s in the near term.
Jake Paul gives Dog Haus a social boost ahead of Mike Tyson fight
Jake Paul, the YouTube sensation turned boxer and new investor in the Dog Haus restaurant concept, gave his restaurant in Arlington, Texas, a social boost ahead of the Mike Tyson boxing bout at AT&T Stadium on Nov. 15.
Paul’s investment in Pasadena, Calif.-based Dog Haus was announced in October.
Dog Haus partnered with Paul, who became both a Dog Haus franchisee and joined the board with his manager, Nakisa Bidarian.
Bidarian, who attended Sunday’s event with Paul, said the influencer’s boxing career would continue. Investments outside those areas will be limited, he added.
“There are three brands that he has personal equity in and is fully invested in,” Bidarian said at the event. “No. 1 is BETR?sports, which is our sports betting company; No. 2 is W, which is our men's personal care company, integrated in the store if you look at the men and women's bathroom; and now No. 3 is Dog Haus.”
Paul also signed a 25-unit franchising agreement with Dog Haus, with plans to open four restaurants in Texas – across Dallas, Houston, and San Antonio – and then expand into Florida and Puerto Rico.
How Crust Pizza Co.’s CEO is positioning the franchise for major growth
In this episode of Take-Away with Sam Oches, Sam talks with Carl Comeaux, CEO of Crust Pizza Co., a 30-unit pizza franchise based outside of Houston
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