Cracker Barrel Old Country Store led the Family-Dining segment in estimated sales per unit.

Family-Dining segment operators find encouragement where they can, after another year of soft unit and sales growth and challenging competition.

Segment players pointed to store remodeling, menu improvements — particularly in the post-breakfast dayparts — and speedier service as tactics they hope will shift growth into higher gear.

However, one of the toughest tasks is coaxing customers to open their wallets, according to Julia Stewart, interim president of IHOP and chief executive and chairman of Glendale, Calif.-based DineEquity Inc., parent company of IHOP and Applebee’s Neighborhood Grill & Bar.

“We’re still dealing with an economic climate that I describe as lumpy and bumpy, and I think the entire Family-Dining segment is dealing with the challenge of consumer hesitation about spending,” Stewart said in an e-mail to Nation’s Restaurant News.

The segment still has fundamental strengths and the potential to return to vigorous growth, according to an industry observer.

“Consumers are still looking to the segment for family-oriented occasions, breakfast and for an affordable experience,” said Bev Cain, senior vice president of operations at Sandelman & Associates, a San Clemente, Calif.-based research firm. “Those are areas where family dining has historically had higher satisfaction than casual dining and other full-service restaurants, and they still have that advantage.”

Data

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All told, the Family-Dining segment players combined for $10.7 billion in U.S. system sales in the Latest Year, up from $10.6 billion in the Preceding Year.

Denny’s is continuing with a revitalization campaign that has upgraded coffee and food and now is addressing decor changes, reported Frances Allen, executive vice president and chief brand officer at the Spartanburg, S.C.-based chain. Hallmarks of the latter are softer lighting, darker colors and a more intimate feel in the dining room.

“What we are seeing as a result is that our lunch and dinner business is actually strengthening,” Allen said.

Three chains, Perkins Restaurant & Bakery, Big Boy/Frisch’s Big Boy and Friendly’s Ice Cream, had more closings than openings during the Latest Year.

Cracker Barrel Old Country Store remained the leader in the Family-Dining segment in terms of estimated sales per unit, with approximately $3.4 million per unit.

“Breakfast is an anchor daypart for us,” said Christopher Ciavarra, senior vice president of marketing for Lebanon, Tenn.-based Cracker Barrel. “But we also have a really nice, robust lunch and dinner business, where we run straight up against casual dining. We pull over 35 percent of our sales at lunch and 35 percent at dinner.”

IHOP topped the segment in total U.S. systemwide sales with $2.8 billion, and in year-over-year sales growth with a 4.4-percent increase. 

Stewart said that IHOP is countering the mounting competition from fast-casual and quick-service chains at breakfast by emphasizing that its breakfast is fresh and made-to-order, and exploring ways to boost speed of service.

Waffle House added a net 53 units in the Latest Year for a segment-leading total of 1,723, a 3.2-percent growth rate. On the other end of the spectrum, Friendly’s had the segment’s greatest net decrease in U.S. units in the Latest Year, 26, bringing its total unit count down to 339. Its systemwide sales fell by 9.9 percent.

According to John Maguire, chief executive of Friendly’s, the bankruptcy protection from which it emerged in 2012 had a silver lining. It brought new capital into the brand, allowed the closure of underperforming stores, and permitted a focus on viable units and on Friendly’s packaged ice cream business in over 8,000 retail stores.

Maguire said the turnaround he is leading at the Wilbraham, Mass.-based chain, which includes improved training, food upgrades and store remodeling, is bearing fruit.

“At this point, 2013 was actually the best year from a sales and profit perspective that Friendly’s has had probably in the past 15 years or more,” he said.

By the numbers

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