Sit-down chains suf­fer as din­ers opt for con­ve­nience

Daily Local News (West Chester, PA) - - WEATHER -

NEW YORK >> Cus­tomers have been walk­ing away from sit-down chains as con­ve­nience and af­ford­abil­ity take prece­dence.

Ruby Tues­day said this week that its CEO is re­sign­ing, and the chain fore­cast an­other quar­ter of lower sales as it closes lo­ca­tions. It’s the lat­est of sev­eral es­tab­lished res­tau­rant play­ers that are re­trench­ing, chang­ing man­age­ment or scram­bling to adapt as peo­ple have more food choices all around them.

Those suf­fer­ing the most ap­pear to be the ones where peo­ple sit down for waiter ser­vice and pay more. Ruby Tues­day’s five straight years of de­clin­ing sales at es­tab­lished lo­ca­tions is an ex­treme ex­am­ple, but oth­ers are feel­ing it.

Chili’s saw sales fall 2.2 per­cent at es­tab­lished lo­ca­tions for the fis­cal year. Ap­ple­bee’s sales edged up just 0.2 per­cent for its fis­cal 2015, but then dropped in the first two quar­ters of this year. Dar­den Restau­rants rid it­self of Red Lob­ster in 2014 after the seafood chain suf­fered years of de­clin­ing sales.

It’s an ef­fect of peo­ple’s chang­ing food pref­er­ences and life­styles. Dar­ren Tris­tano, pres­i­dent of the res­tau­rant in­dus­try track­ing firm Tech­nomic, said younger peo­ple in par­tic­u­lar are on the go and want their food to be, too.

“They’re look­ing for con­ve­nience, qual­ity, porta­bil­ity and health­ful­ness,” Tris­tano said.

A decade ago, sit-down restau­rants ac­counted for 53 per­cent of the res­tau­rant in­dus­try, Tris­tano said. Now, the bal­ance has shifted and fast-food places — those with­out wait­ers or wait­resses — have 53 per­cent of the mar­ket. Pan­era dis­placed Ap­ple­bee’s, the last sit-down chain in the top 10 res­tau­rant com­pa­nies by sales, last year, ac­cord­ing to Tech­nomic.

Where growth is happening, Tris­tano noted, is in the cor­ners of the food in­dus­try — con­ve­nience stores, the pre­pared food sec­tions of su­per­mar­kets, meal de­liv­ery com­pa­nies and at in­de­pen­dent restau­rants that don’t report their sales.

The res­tau­rant in­dus­try is par­tic­u­larly prone to change, with es­tab­lished chains con­stantly in dan­ger of look­ing dated as new­com­ers emerge. The com­pet­i­tive pres­sure is pinch­ing even gi­ants like McDon­ald’s, which is try­ing to im­prove the im­age and qual­ity of its food. The world’s big­gest burger chain ap­pears on track to re­duce its res­tau­rant count in the U.S. for the sec­ond year in a row. Sub­way has seen do­mes­tic sales de­clin­ing for the past two years.

One ad­van­tage big fast­food chains have is that they’re still more con­ve­nient and af­ford­able than sit-down restau­rants. It’s why Wendy’s CEO Todd Pene­gor said he thinks fast food will keep tak­ing mar­ket share from those chains.

Un­der­scor­ing the power of con­ve­nience is that amid the in­dus­try pres­sures, Domino’s has been do­ing well. The pizza chain doesn’t have the best culi­nary rep­u­ta­tion, but an­a­lysts say the de­liv­ery con­ve­nience it of­fers at a low price fits well with what peo­ple want.

Above, cus­tomers en­joy lunch at an Ap­ple­bee’s in New York on June 3, 2009.

At left, visi­tors to New York’s Times square walk past a Ruby Tues­day res­tau­rant on Fri­day.

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