The dining industry is struggling to regain its pre-pandemic footing. COVID-induced store closures, ongoing inflation, and significant labor shortages have combined to create the perfect storm for a category that relies on discretionary spending to thrive. But even in the face of these challenges, some concepts appear to be working better than others.
Our recent white paper dives into the latest location intelligence data to understand what a winning dining strategy looks like in 2023. How are some dining chains finding success despite the difficult overall environment? What are money-strapped consumers willing to splurge on? And what can restaurants and other eateries do to maximize customer engagement and satisfaction? Below is a taste of our findings. For the full report, click here.
Wingstop’s “Swicy” Approach to Innovation
Introducing innovative menu items can help guide new consumer tastes and create a buzz that drives visits and sales – so some chains are seeing success by tweaking their menus to add sought-after items likely to generate enthusiasm.
One restaurant with its ear to the ground is popular chicken wing chain Wingstop. Ranked by Fast Company as one of 2022’s top ten innovative dining companies, Wingstop has proven itself to be deft at adapting to changing circumstances – and the chain’s commitment to innovation extends to its menu.
Last June, Wingstop introduced its limited-edition Hot Honey Rub – a “swicy” (sweet and spicy) dry rub that offered delicious tangy flavor with none of the sticky gooeyness of traditional honey wings. The rollout came just weeks after leading food-industry data tracking company Tastewise ranked spicy honey as a top flavor trend for the summer. Tastewise noted that while discussion of the term on social media had gone up 49% over the previous year – and its use in online recipes had jumped 60% – only 2% of restaurants incorporated the flavor into their menus. While the Hot Honey Rub was available only through the summer, it appears to have been a hit, generating plenty of online buzz.
Wingstop’s nimble approach to menu offerings appears to be working. In Q3 2022, the fast casual franchise posted a 18.4% increase in net income compared to the third quarter of 2021. And between May and December 2022, foot traffic to its restaurants was up both YoY and Yo3Y, with November seeing a whopping 49.1% increase in visits compared to 2019.
First Watch Sails Ahead
First Watch is another dining chain that has been quick to respond to shifting consumer demand. Named after sea crews’ first shift of the day, First Watch specializes in breakfast, lunch, and brunch, and is only open from 7:00 AM to 2:30 PM. Since going public in 2021, the company has continued to expand and now has 455 restaurants in 29 states. And like Wingstop, First Watch experienced significant growth in 2022, reporting a 29.6% increase in same-restaurant sales compared to 2019.
First Watch CEO and President Chris Tomasso has highlighted the company’s system of identifying early trends and quickly rolling out new menu items as a key element of its success. And the importance of this innovation-driven strategy is borne out by a look at some of the eatery’s recent menu changes. In early 2022, First Watch introduced Superseed Protein Pancakes – a new product geared towards health-conscious customers who crave a nutrient-packed sweet treat.
The decision to launch the product appears to have anticipated unmet consumer demand for high protein breakfasts: According to Tastewise, 2022 saw an 18.0% year-over-two-year (Nov. 2022 compared to Nov. 2020) jump in use of the term “high protein breakfast” on social media, and a 26% drop in menu mentions. Tastewise also found that pancakes were among the most popular prepared food pairings for “high protein” last year, and that there was an uptick in interest in energy-fuelling breakfast foods as well.
Foot traffic data indicates that consumers are receptive to First Watch’s menu innovations. Despite an already strong performance in 2021, YoY foot traffic for the brand was up for most of 2022, and Yo3Y foot traffic growth ranged between 11.4% and 39.5%. While the chain’s fleet expansion undoubtedly contributed to this remarkable visit growth, the visit increase likely also reflects increased demand for the company’s offerings.
Dining Steps up its Game
Inflation and cutbacks in discretionary spending have presented an already pandemic-weakened dining industry with significant challenges. In this unusual environment, innovative dining chains are finding success by meeting customers’ evolving needs.
Read the full report here.
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