Restaurants Rethink Their Channel Strategy Amid Ongoing Margin Pressure

TGI Fridays

This week in restaurant news, TGI Fridays looks to boost on-premises sales, Del Taco opens its first drive-thru-only store and Panera Bread looks to manage costs with a streamlined menu.

Casual dining bar and grill chain TGI Fridays, which has more than 650 restaurants across 52 countries, announced Tuesday (Aug. 29) the appointment of Brandon Coleman III, the brand’s former U.S. president and global chief marketing officer, as its new CEO.

This appointment marks a shift in focus on the part of the casual dining chain toward driving dine-in visits. As the brand stated in the news release, Coleman will be “focused on anchoring TGI Fridays around its heritage as the bar of choice providing the ideal environment for socialization and good times.”

In recent years, the casual dining brand seemed more focused on its digital channels, relaunching its rewards program this spring and, in the last couple of years, expanding into ghost kitchens and other off-premises-focused formats.

Just over half of all restaurant sales are in-restaurant, according to PYMNTS research.

Specifically, data from PYMNTS’ study “Connected Dining: Rising Costs Push Consumers Toward Pickup,” which drew from a survey of more than 2,100 U.S. consumers earlier this year, revealed that 51% had acquired their most recent restaurant meal onsite, while 39% did so for pickup and 10% for delivery.

Some restaurants have found their virtual brand efforts to not yield the profits they were hoping for. For instance, Brinker International, parent company of Chili’s Grill & Bar and Maggiano’s Little Italy, shared on its recent earnings call that it will “continue to strategically shed the unprofitable Maggiano’s virtual brands sales,” per CEO Kevin Hochman.

Del Taco Opens Its First Drive-Thru-Only Restaurant

Quick-service restaurant (QSR) chain Del Taco, which has about 600 restaurants across 15 states, announced Monday (Aug. 28) the opening of its first pickup-only location in Albuquerque, New Mexico.

With no dining room, this store does have a drive-thru lane, a walk-up window for orders and pickup and lockers for mobile customers and delivery drivers to collect their orders without waiting in line.

“The drive-thru-only Fresh Flex design delivers one of the most convenient QSR experiences anywhere. With so many pick up options, it caters to what today’s tech-savvy and ‘on the go’ consumer expects,” Chad Gretzema, brand president of Del Taco, said in a statement.

The move comes as restaurants across the industry look for ways to meet demand without sinking the high cost into running a full restaurant. Indeed, across the QSR industry, brands have reportedly been seeing a decrease in on-premises orders.

Panera Bread Reportedly Tests Streamlined Menu Amid Ongoing Food Inflation

Fast-casual chain Panera Bread is trying out a significantly smaller menu, Restaurant Business reports, though the brand will not disclose how many items this reduced menu would cut.

“We are currently testing a streamlined menu in a small amount of Panera bakery-cafes, providing guests with a faster and more convenient experience while also simplifying operations for our associates,” the restaurant told the news outlet.

A viral TikTok from an employee that has since been made private stated that the brand would cut 30 items, per Mashed, while a photo posted to Reddit by one person claiming to be an employee shows what appears to be more than 50 items leaving menus.

The news of the brand’s test of a streamlined menu comes as rising food prices eat into restaurant margins, while passing those increases onto consumers takes a toll on loyalty. Consumer Price Index (CPI) data from the U.S. Bureau of Labor Statistics (BLS) showed that year-over-year restaurant inflation amounted to 7.1% in July, almost twice the grocery inflation rate, and PYMNTS research shows that consumers perceive the impacts of these increases to be even more than the government-measured rate.