Ched­dar’s crois­sants could help chain

Orlando-based brand strug­gled since 2017

Orlando Sentinel - - FRONT PAGE - By Austin Fuller

Don’t dis­miss free honey but­ter crois­sants.

Ched­dar’s Scratch Kitchen re­cently started giv­ing each cus­tomer a crois­sant, a move that could help a brand that has strug­gled since Orlando-based Dar­den Restau­rants ac­quired it in 2017.

“In­vestors should not un­der­es­ti­mate the po­ten­tial of this de­ci­sion to mean­ing­fully im­prove cus­tomer’s value per­cep­tion and in­tent to re­turn,” an­a­lyst Chris O’Cull of Stifel wrote in a re­port. “Giv­ing away highly crave­able bread can ben­e­fit guest loy­alty and fre­quency.”

Ched­dar’s has en­dured a steady de­cline in same-restau­rant sales since Dar­den took over the brand, but O’Cull said he be­lieves there is a high prob­a­bil­ity that will soon change un­der the com­pany that also owns Olive Gar­den and LongHorn Steak­house.

Those restau­rants have their bread­sticks and honey wheat bread, re­spec­tively, and Ched­dar’s had its honey but­ter crois­sants on the menu be­fore the first one be­came free.

“In Oc­to­ber, [Ched­dar’s] be­gan pro­vid­ing ev­ery guest with their most crave­able and high­est-rated menu item: their honey but­ter crois­sants,” Dar­den CEO Gene Lee said. “This is an el­e­ment of guest ser­vice that we iden­ti­fied as an op­por­tu­nity when we ac­quired the brand.”

‘Peo­ple love bread’

At Ched­dar’s, crois­sants are baked fresh ev­ery 20 min­utes or less and driz­zled with warm honey but­ter. Each Ched­dar’s cus­tomer re­ceives a com­pli­men­tary one, and those who want

more can or­der two for

$1.99.

“I love them,” said Jas­mine Manuel, a 27-year-old Orlando res­i­dent who vis­ited the Ched­dar’s near Orlando In­ter­na­tional Air­port. “They melt in your mouth.”

A lot of restau­rant chains have built cus­tomer bases on bread bas­kets, said Robb Seltzer, di­rec­tor of food and bev­er­age op­er­a­tions at the Univer­sity of Cen­tral Florida’s Rosen Col­lege of Hos­pi­tal­ity Man­age­ment.

“Peo­ple love bread,” he said.

The restau­rant chain didn’t stop at giv­ing away free car­bo­hy­drates to ev­ery cus­tomer. In Novem­ber, Ched­dar’s vis­ited hospi­tals and birthing cen­ters across the coun­try and gave fam­i­lies with new­borns crois­sant-in­spired mer­chan­dise in­clud­ing sup­port pil­lows and blan­kets, along with ac­tual crois­sants and other food.

At the South Se­moran Boule­vard Ched­dar’s, man­ag­ing part­ner Jeremy Reed said the crois­sants were pop­u­lar be­fore they were free.

“We’d sell a lot of them, and we still sell quite a few,” he said.

That “crave­abil­ity” is im­por­tant in get­ting peo­ple talk­ing about com­ing back to the restau­rant, O’Cull said in an in­ter­view.

“I think you’ll start to see bet­ter sales as a re­sult of that,” he said.

‘They’ll fix it’

Ched­dar’s same-restau­rant sales have fallen ev­ery full quar­ter com­pared with the pre­vi­ous year since Dar­den ac­quired the restau­rant chain, earn­ings re­ports show.

In the most re­cent re­port, Ched­dar’s same-restau­rant sales dropped by 1.2%. Still, that small dip was an im­prove­ment for the brand and was its small­est per­cent­age de­crease in samer­estau­rant sales in a full quar­ter since Dar­den took over.

That fig­ure has ex­pe­ri­enced drop-offs as high as 5.4% in the pre­vi­ous quar­ter, 4.7% in the fourth quar­ter of fis­cal year 2018 and 4% in both the first and sec­ond quar­ters of fis­cal year 2019.

One is­sue Dar­den has had to ad­dress since the ac­qui­si­tion is high staff turnover, O’Cull said.

Lee ad­dressed the mat­ter dur­ing the com­pany’s earn­ings call, say­ing Ched­dar’s con­tin­ued to see im­prove­ments in hu­man re­sources and op­er­a­tions met­rics.

“Over­all staffing lev­els for man­ager and team mem­bers re­main strong dur­ing the quar­ter and re­ten­tion lev­els con­tinue to move in the right di­rec­tion,” Lee said.

Look­ing ahead, O’Cull said there is a high prob­a­bil­ity Ched­dar’s same-restau­rant sales grow in Dar­den’s fourth quar­ter, which ends in May.

With menu items that in­clude chicken pot pie, ribs and adult bev­er­ages like the “Texas Mar­garita,” Ched­dar’s is Dar­den’s third-largest brand.

It had 166 com­pa­ny­owned restau­rants in Novem­ber, be­hind Olive Gar­den’s 867 and LongHorn Steak­house’s 518.

O’Cull said the big op­por­tu­nity is to ex­pand.

“I think they’ll fix it,” he said.

CHED­DAR'S/COUR­TESY PHOTO

Ched­dar’s vis­ited lo­cal hospi­tals in Novem­ber and gave fam­i­lies with new­borns crois­sant-in­spired mer­chan­dise, in­clud­ing sup­port pil­lows.

AUSTIN FULLER/ORLANDO SENTINEL

“They melt in your mouth,” said Jas­mine Manuel, a cus­tomer at the Ched­dar’s Scratch Kitchen near Orlando In­ter­na­tional Air­port.

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