Casual dining is eating fast food’s lunch right now
Americans don’t see fast food as good value anymore. Now, even Red Lobster is feeling confident enough to try some old tricks.
After shelling out to the point of self-destruction on its $20 “Endless Shrimp” deal, and thus learning the true meaning of “all you can eat,” Red Lobster is back, having emerged from Chapter 11 bankruptcy last September.
This time, though, the company’s new management is betting on a different (limited) crustacean to lure consumers back, on Monday announcing the return of “Crabfest” following a four-year hiatus — not to be confused with “Endless Crab,” another financially devastating promotion that the company ran in 2003.
But if ever there were a time to revive a casual dining business with a familiar playbook, it’s now.
As reported by The Wall Street Journal last Friday, brands like Red Lobster and Cracker Barrel that have seen traffic slump in recent years are planning to spend millions to overhaul their locations and offerings. Their goal? To emulate the success of some of their casual dining peers.
At breadstick-renowned Olive Garden, same-store sales were up 7% year over year in its most recent quarter. Over at Brinker, flagship brand Chili’s is red hot, with same-store sales up a whopping 32% in the first three months of the year. At McDonald’s, traffic is going the other way, with same-store sales dropping 3.6% last quarter.
Dine a dozen
Indeed, as cost-conscious customers have been put off by inflation-spiked fast-food menus, they’ve been drawn toward household name casual restaurants by a combination of good service, good atmosphere, and good prices. A survey conducted by YouGov at the end of last year found that casual chains had soared in US consumers’ approximations as the best-value option for dining, while value scores for the fast-food and fast-casual categories sank throughout 2024.
Olive Garden topped the list of the brands considered the best for value, with Wendy’s the only fast-food category restaurant to break the top 10. Meanwhile, fast-food outlets dominated the list of poorest-value restaurants… but it was Starbucks, home of numerous ~$7 drinks, that was named the worst-value option overall.
