By Bruce Horovitz, USA TODAY
(Aug. 25, 2006) - Casual restaurants are no longer taking the national dining slump casually.
Lower Prices, More Sales?
In the face of a meltdown in same-store sales and falling customer counts, some of the biggest names in casual dining - from Outback Steakhouse to Applebee's to T.G.I. Friday's - are taking serious actions to try to salvage 2006. Some are even chopping prices.
Excluding the weeks after 9/11, this is the toughest period the industry has faced in nearly a decade, says Richard Snead, CEO of Carlson Restaurants Worldwide, which owns Friday's.
"This is unprecedented," concurs Paul Avery, COO of OSI Restaurant Partners (Quote: OSI), whose brands include Outback. Beginning in November, Outback plans to cut prices across its menu, he says.
The $68 billion casual-dining sector posted a 1.8% decline in same-store sales in June, the most recent month reported by Knapp-Track, which monitors the restaurant industry.
June guest counts were down 4.4%, CEO Malcolm Knapp says.
That may explain these moves:
• Outback. The chain has carved $1 off the price of its popular sirloin steaks in about 40% of its markets, Avery says.
By November, it will lower prices on ribs, side salads, appetizers and drinks, Avery says. "We've lowered prices from time to time, but never this magnitude."
• Applebee's. To lure price-sensitive diners, the chain has a three-course "Southwest Fiesta" promotion (appetizer, entree and dessert) for $9.99.
Applebee's today will announce it has hired Food Network chef Tyler Florence. He's creating four "fresh" entrees, which he calls quality cuisine at value prices.
"We're adding a whole different category of food to Applebee's," he says.
• T.G.I. Friday's. Known for appetizers, it has a new appetizer menu with limited-time discounts up to 50%, Snead says. Over the past six weeks, Friday's has introduced 23 items, the most ever for the chain, he says.
• Cheesecake Factory. For the price-conscious, the chain has created smaller, cheaper lunch entrees. The Shepherd's Pie typically sold for $13.95 now has a lunch portion for $10.95.
