In the past decade, the casual dining sector has faced a
pricing conundrum that’s driven customer migration away from once-popular
chains like TGI Fridays, Applebee’s, Red Robin, IHOP, and Olive Garden,
according to Steven Johnson
Grocerant Guru® at Tacoma, WA based Foodservice
Solutions®.
These brands built their success on offering accessible,
sit-down dining with a consistent and family-friendly experience. However,
shifts in consumer behavior, rising menu prices, and evolving expectations for
convenience have collectively eroded their customer base, with closures and
declining sales highlighting the urgency of the issue. Here, we’ll explore five
primary reasons for this decline, along with five actions these brands can take
to regain relevance and reestablish a loyal following.
A 10-Year Look Back at Casual Dining’s
Shifting Landscape
Between 2014 and 2024, the casual dining industry has seen
a marked decline in traffic and sales. Brands that once led the market began
closing locations—Applebee’s,
for example, closed more than 300 stores since 2017 in a downsizing effort to
improve profitability, while TGI Fridays
has cut back its locations by over 20%ift is not isolated to a few chains;
casual dining brands across the board have faced pressures from rising
operational costs, changing consumer dining preferences, and fierce competition
from fast-casual and Ready-2-Eat sectors.
Five Reasons Casual Dining is Losing
Customers
1.
Escalating Menu
Prices
While inflation and rising labor costs have driven up the prices of goods,
casual dining establishments have been forced to pass these costs onto
customers. The price of an average meal has increased more than 30% over the
past decade, moving to premium dining while the experience remains largely
unchanged. This shift makes casual dining less appealing to price-sensitive
consumers, especially when fast-casual options provide similar meals at lower
costs.
2.
Long Wait and
Service Time
The time investment required for a sit-down meal in casual dining has also
proven a deterrent. With dining time averaging around an hour, it’s a hard sell
for today’s fast-paced lifestyle. Consumers who want quality meals without a
prolonged dining experience are increasingly choosing faster alternatives that
offer the same level of flavor and customization.
3.
Declining Service
Quality and Expectations
Casual dining used to be synonymous with attentive, friendly service. But with
staffing challenges, high turnover, and the pressure to reduce costs, the
quality of service has noticeably slipped. Today’s consumer has higher
expectations for personalized, quick service. Waiting for a server, slow food
preparation, and inconsistent service experiences have driven many customers
away.
4.
Brand Saturation and
Identity Issues
Many casual dining brands have struggled to maintain a distinct identity amid a
crowded market. Applebee’s and TGI Fridays, for instance, have invested in
bar-focused menu offerings to boost revenue, but these changes have not
translated into long-term customer loyalty. In chasing trends, many brands have
neglected their core customer base and lost a clear sense of who they are and
what they stand for.
5.
Increased
Competition from Fast-Casual and Ready-2-Eat Options
As fast-casual and Ready-2-Eat sectors have grown; consumers have found the
flexibility they crave elsewhere. Chains like Chipotle, Sweetgreen, and Panda Express provide fresh, fast meals with more convenience and
variety. Furthermore, grocery stores and convenience stores have expanded their
fresh and Heat-n-Eat options, offering alternatives that satisfy consumer
demand for ready-to-go, flavorful meals.
Five Steps to Reestablish Customer
Relevance
1.
Value-Driven Menu
Options
Casual dining chains need to address pricing perception by offering greater
value. Value-driven menu bundles, family-style meals, and weekday specials that
balance portion sizes with reasonable pricing can draw back budget-conscious
diners. Adjusting prices for smaller portions and creating flexible meal
combinations can help lower check averages while appealing to larger groups.
2.
Improve Service
Speed and Efficiency
Reducing wait times and increasing service efficiency is key. This could mean
expanding mobile app capabilities for pre-ordering and pay-at-the-table
options, reducing the wait between courses and the time spent for check-out.
Speedier, technology-enhanced service can improve customer satisfaction and
make the dining experience more appealing in today’s fast-paced environment.
3.
Focus on Digital and
Mobile Ordering
Many consumers prefer the convenience of ordering ahead and taking food home,
so expanding digital capabilities is essential. IHOP
and Olive Garden have both tested mobile ordering apps that allow customers to
reserve tables, view menus, and pay digitally. Emphasizing a seamless digital
experience can help casual dining brands capture more of the growing
off-premises market.
4.
Highlight
Differentiation and Brand Identity
Each brand must focus on what made it unique in the first place. Applebee’s,
for instance, could emphasize its role as a neighborhood bar and grill with
local promotions and unique menu offerings, while Olive Garden
might double down on family-style Italian dining. Leaning into their
distinctive appeal will give each brand a clearer identity and better resonate
with target consumers.
5.
Enhance the Dining
Environment
Lastly, casual dining brands must invest in refreshing their dining spaces to
keep pace with modern expectations. A comfortable, clean, and engaging dining
space enhances the sit-down experience and justifies the higher price point.
Casual dining brands like Red Robin,
known for a fun, family-friendly ambiance, should focus on interactive features
that make dining out a memorable event.
The Road Ahead for Casual Dining
The past ten years have highlighted a complex pricing
conundrum for casual dining brands. As they face fierce competition from
fast-casual and Ready-2-Eat markets, these brands must adapt or risk further
decline. By focusing on value-driven menus, efficient service, digital
integration, clear brand identity, and enhanced dining spaces, casual dining
can regain relevance and, once again, become a go-to choice for American
consumers. For now, though, the road to recovery requires that they deeply
consider what made them successful in the past, align with today’s consumer
preferences, and anticipate future trends in dining.
Don’t over reach. Are
you ready for some fresh ideations? Do your food marketing ideations look more
like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while
creating a platform for consumer convenient meal participation, differentiation
and individualization? Email us
at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the
following links: Facebook, LinkedIn, or Twitter
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