In a lot of ways—and for many reasons—independent restaurants trumped chains in 2017.Indies are nimble and able to seize upon trends like a hungry diner on avocado toast. Plus, they have the advantage of simply not being linked with chains, which are seeing pointed ambivalence, particularly from younger consumers.
A big reason for the negativity toward chains is the current perception. “There are two restaurant industries: These big public companies aren’t really in the restaurant business anymore. They’re retailers or manufacturers or whatever, but food and service aren’t at the heart of what they do,” Dan Simons, co-owner of Farmers Restaurant Group, which operates top-grossing independent Founding Farmers, recently told Restaurant Business. “Smart independents look at them and say, ‘Those guys are having a hard time and are dying, but I’m not having a hard time.’”
While many stalwart independents met a fate similar to that of chains this year, even closing their doors for good, the numbers tell the clearest story of indies’ ascendance. The 100 largest full-service chains saw sales grow just 0.8%, while small chains and independent full-service spots had 3.3% growth, according to the most recent figures from Technomic. The top 100 limited-service chains reported sales growth of 4.2%, while indies grew 5.8%, Technomic data shows.
Those same 100 full-service chains generated $51.6 billion in sales volume. During the same period, indie and small chains did $172.9 billion in sales, according to Technomic. The top 100 limited-service chains fared far better, however, logging $195.2 billion in sales, to $48 billion for small chains and indie LSRs.
But don’t hold a funeral for chains just yet. Big restaurant groups typically have their own reservoir of cash that allows them to devote money to trends and potential innovations to see what works. “Chains are smart,” says Joe Pawlak, managing principal for Technomic. “[But] they have to start being different. The biggest issue with chains today is they all, in the consumers’ minds, are the same.”
That’s part of the reason chains spent much of the year trying not to look like chains. Growing 15-unit Southern-focused Tupelo Honey Cafe launched a cocktail menu specific to its new Denver location (its first restaurant outside of the South), while also rolling out a philanthropic program designed to engage with local charities. “We’re not the Tupelo Honey in Denver,” says Tyler Alford, the chain’s VP of operations. “We’re Denver’s Tupelo Honey.”
Chains need to find the right mix of value, atmosphere and service, Pawlak says. Brands that built their business model around families going out to eat on weeknights are having to rethink that plan. “People don’t have time to do that anymore,” he says.
To steal some of the dining dollars from independents, many chains are hedging their bets on off-premise—something they have a little more leverage to negotiate when working with third-party companies. From engaging delivery services to revamping layouts to accommodate off-premise orders, takeout and delivery will likely be how chains regain their footing among the independents, Pawlak says. “These guys have a big opportunity,” he says.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.