Chains in the Family-Dining segment posted generally lackluster domestic sales and new-unit growth in the Latest Year, the result of continuing economic headwinds across the country and more aggressive competition from other segments.

The Family-Dining segment generated combined U.S. systemwide sales of $10.5 billion in the Latest Year, up just 0.6 percent from the Preceding Year. The category’s average estimated sales per unit, or ESPU, also grew only marginally, increasing 0.7 percent to $1.7 million in the Latest Year.

Data

• Top 100 Rankings and Results

Overall, the segment’s aggregate domestic systemwide sales figures have changed little from those reported back in 2009 during the depths of the recession when total sales were $10.7 billion.

While some might view any growth in the Latest Year as being positive news, many of the Family-Dining chains continue to struggle to maintain market share in the face of economic weakness and increased competitive pressure from fast-casual and quick-service restaurants.

The seven brands comprising the Top 100 Family-Dining category accounted for about 4.9 percent of the study’s Latest-Year U.S. systemwide sales, down from a 5.3-percent share two years earlier. Within that Latest-Year market-share percentage, breakfast represents the dominant daypart, said Bev Cain, director of research operations at San Clemente, Calif.-based research firm Sandelman & Associates.

The family-dining segment is led by IHOP.

And that’s partly why family chains are in trouble, she added.

“So many fast-food chains are focusing on breakfast,” she said. “[Family chains] have really been pressed by competition for breakfast because there’s such great QSR focus on it.” The smart family-dining chains, Cain said, will take notice and shift strategy by upgrading food or restaurant design, or pushing marketing more heavily.

Indeed, IHOP — which topped the category with nearly $2.7 billion in systemwide sales during the Latest Year — has attempted to address the breakfast competition head-on, recognizing that there are “many more competitors trying to compete in the breakfast category,” said Craig Hoffman, director of external communications at IHOP.

New menu offerings like Griddle Melt sandwiches and Brioche French Toast have been popular with customers, he said.

“We maintained our stability in 2012 by focusing on our heritage as a breakfast leader,” he said.

Like IHOP, Denny’s has responded to competition from quick-service chains. The No. 2 Family-Dining chain developed a new coffee platform that rolled out early in 2013 in response to improving coffee offerings in the QSR segment, according to Denny’s president and chief executive John Miller.

Within the segment, all rankings for Latest-Year systemwide sales remained unchanged from the Preceding Year. The Big Boy system, operated and franchised by Big Boy Restaurants International LLC and Frisch’s Restaurants Inc., finished last within the category, with systemwide sales of $395 million.

Cracker Barrel Old Country Store ranked first in ESPU, posting approximately $3.3 million per unit at its 616 U.S. locations. Waffle House, despite ranking No. 1 in total number of restaurants with 1,670 units, ranked last in ESPU with $609,200 per unit.

Nevertheless, Miller said, “people took flat as the new up” in 2012, given the continuing weak economic situation. Unemployment numbers were still high heading into 2012, he said, adding that going into 2013, those numbers already had improved.

“Unemployment is the strongest correlator for full-service meals,” more so than consumer confidence or gas prices, Miller said. “Clearly, today, there’s been more job growth. It’s still slow; it’s still choppy. … But on the whole, the job market does continue to improve.”

Despite the weak economic conditions, three of the eight chains reported a net gain in units during the Latest Year. However, their growth efforts were not enough to boost the segment’s total number of U.S. units, which fell by two from the Preceding Year to 6,981. Waffle House opened the most units in 2012, adding 34 to bring its total  to 1,670, while Friendly’s Ice Cream — which filed for Chapter 11 bankruptcy protection in October 2011 and emerged in January 2012 — closed the most locations, shuttering 46 stores in the Latest Year.

By the numbers

(Continued from page 1)

Contact Erin Dostal at [email protected].
Follow her on Twitter: @ErinDostal