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Casual Dining - US - October 2010

The casual dining segment has emerged as the poster child for recession-era restaurant industry woes, with the symptoms of declining customer counts and check averages, sales slumps and unit hemorrhaging, and even bankruptcies.

Cash-strapped consumers faced with job losses and tightened budgets have been having a hard time justifying a sit-down meal out when extras such as drinks and tip boost the bill. Instead they are opting to stay home to eat or trade down to quick service and fast casual restaurants that are offering value prices and improved quality.

In reaction, casual dining chains have been quick to offer “deal menus” in attempts to lure in customers, which has ultimately done little to help already tight margins and has created a consumer base that feels entitled to discounts.

This report focuses on how the casual dining segment will need to adapt to grow in the current environment and moving forward, including the following highlights:

  • How quick service and fast casual segment players are stealing customers and how to beat them at their own game
  • How the “portfolio profit” model can help operators to diversify revenue streams
  • The importance of differentiating the segment and highlighting what it can offer that others cannot
  • What the impact has been of the “deal menus” and how to diversify the programs to better attract customers and ultimately wean them off the initiatives
  • Who the core demographics for the segment are and how to shift focus to address the needs of the changing face of the core customer base
  • What differentiates the segment in the eyes of the customer, and what it is that most motivates them to want to eat at a casual dining restaurant

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Mintel Menu Insights
            • Consumer survey data
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Casual dining: the poster child for recessionary restaurant woes
                      • Turning the profitability tide
                        • Results within the category not segment driven
                          • Promotions highlight menu features and special pricing
                            • The (mostly) diverse and (often) varied casual dining menu
                              • Applebee’s and Olive Garden top consumer picks
                                • Cutting back and opting out
                                  • Why casual dining?
                                  • Insights and Opportunities

                                    • Differentiation is essential
                                      • Achieving “portfolio profit”
                                        • Attracting customers at off-hours
                                          • Snacks and mini-meals
                                            • Happy hour
                                              • The demand for specialty menus
                                                • Nutritional knowledge is power
                                                  • Social networking: the new CSR rep
                                                  • Inspire Insights

                                                      • Trend: Experience Is All
                                                      • Market Size and Forecast

                                                        • Moderate growth ahead after painful recession
                                                          • Casual dining sales and forecast
                                                            • Figure 1: U.S. sales at casual dining restaurants, at current prices, 2005-15
                                                            • Figure 2: U.S. sales at casual dining restaurants, at inflation-adjusted prices, 2005-15
                                                        • Market Drivers

                                                          • Casual dining: the poster child for recessionary restaurant woes
                                                              • Figure 3: NRA Performance Indices, January 2009-August 2010
                                                              • Figure 4: Adjusted Foodservice and Drinking Place Sales, January 2008-August 2010
                                                            • Unemployment and underemployment discourage spending out
                                                              • Figure 5: Unemployment and underemployment rates, January 2007-September 2010
                                                            • Real disposable personal income
                                                              • Figure 6: U.S. disposable personal income growth, January 2007-August 2010
                                                            • Consumer confidence
                                                              • Figure 7: University of Michigan Consumer Sentiment Index, March 2007- September 2010
                                                            • Demographics
                                                                • Figure 8: Population by age, 2005-15
                                                            • Competitive Context

                                                              • Casual dining customers trading down
                                                                  • Figure 9: Attitudes toward fast casual compared to casual dining, by age and gender, April 2010
                                                              • Segment Performances

                                                                • Contemporary American and Seafood Segments
                                                                  • Unit growth unbalanced against fixed sales results
                                                                    • Figure 10: Systemwide restaurant sales of leading contemporary American and seafood casual dining chains, 2007 and 2009
                                                                  • Italian and Ethnic Segment
                                                                    • Olive Garden: the segment powerhouse
                                                                      • Figure 11: Systemwide restaurant sales of leading Italian and ethnic casual dining chains, 2007 and 2009
                                                                    • Steakhouse Segment
                                                                      • Outback leads segment, and market, for sales declines
                                                                        • Figure 12: Systemwide restaurant sales of leading steakhouse casual dining chains, 2007 and 2009
                                                                    • Company Profile: Chili’s

                                                                        • Company performance
                                                                          • Figure 13: Chili’s systemwide sales and units, 2007 and 2009
                                                                        • Core Customers
                                                                          • Figure 14: Chili’s top demographics, February 2009-March 2010
                                                                        • On the menu
                                                                          • Figure 15: Makeup of Chili’s menu, Q3 2010
                                                                          • Figure 16: Chili’s, top five cuisine types, Q4 2009-Q3 2010
                                                                        • New menu additions
                                                                          • Salad
                                                                            • Better Than Ever Big Mouth Burgers
                                                                              • Tacos Wrapped in Flavor
                                                                                • Chicken
                                                                                  • Sandwiches
                                                                                  • Company Profile: Applebee’s

                                                                                      • Company performance
                                                                                        • Figure 17: Applebee’s systemwide sales and units, 2007 and 2009
                                                                                      • Core Customers
                                                                                        • Figure 18: Applebee’s top demographics February 2009-March 2010
                                                                                      • On the menu
                                                                                        • Figure 19: Makeup of Applebee’s menu, Q3 2010
                                                                                        • Figure 20: Applebee’s top five cuisine types, Q3 2009-Q2 2010
                                                                                      • New menu additions
                                                                                        • Salads
                                                                                          • Sandwiches
                                                                                            • 2 For $20
                                                                                              • Signature Steaks
                                                                                                • Ribs and Fajitas
                                                                                                  • Burgers
                                                                                                    • Sizzling Entrées
                                                                                                    • Company Profile: Outback Steakhouse

                                                                                                        • Company performance
                                                                                                          • Figure 21: Outback systemwide sales and units, 2007 and 2009
                                                                                                        • Core Customers
                                                                                                          • Figure 22: Outback Steakhouse top demographics February 2009-March 2010
                                                                                                        • On the menu
                                                                                                          • Figure 23: Makeup of Outback MENU, Q3 2010
                                                                                                          • Figure 24: Outback Steakhouse, top five cuisine types, Q4 2009-Q3 2010
                                                                                                        • New menu additions
                                                                                                          • Signature Cocktails
                                                                                                            • Import Beers
                                                                                                              • Premium Spirits
                                                                                                              • Company Profile: Olive Garden

                                                                                                                  • Company performance
                                                                                                                    • Figure 25: Olive Garden sales and units, 2007 and 2009
                                                                                                                  • Core Customers
                                                                                                                    • Figure 26: Olive Garden top demographics February 2009-March 2010
                                                                                                                  • On the menu
                                                                                                                    • Figure 27: Makeup of Olive Garden dinner menu, Q3 2010
                                                                                                                    • Figure 28: Olive Garden Steakhouse, top five cuisine types, Q4 2009-Q3 2010
                                                                                                                  • New menu additions
                                                                                                                    • Pasta Ripiena
                                                                                                                      • Pesce
                                                                                                                        • Parmesan-Polenta Crusted Entrées
                                                                                                                          • Carne (Beef and Pork)
                                                                                                                            • Passion for Italian Cuisine
                                                                                                                              • Dolce
                                                                                                                                • Signature House Wines
                                                                                                                                  • Birra – Domestic
                                                                                                                                  • Company Profile: Red Lobster

                                                                                                                                      • Company performance
                                                                                                                                        • Figure 29: Red Lobster sales and units, 2007 and 2009
                                                                                                                                      • Core Customers
                                                                                                                                        • Figure 30: Red Lobster top demographics February 2009-March 2010
                                                                                                                                      • On the menu
                                                                                                                                        • Figure 31: Makeup of Red Lobster menu, Q3 2010
                                                                                                                                        • Figure 32: Red Lobster top five cuisine types, Q4 2009-Q3 2010
                                                                                                                                      • New menu additions
                                                                                                                                        • Signature Combinations
                                                                                                                                          • Celebrate Crabfest
                                                                                                                                          • Company Profile: P.F. Chang’s

                                                                                                                                              • Company performance
                                                                                                                                                • Figure 33: P.F. Chang’s sales and units, 2007 and 2009
                                                                                                                                                • Figure 34: P.F. Chang’s top demographics February 2009-March 2010
                                                                                                                                              • On the menu
                                                                                                                                                • Figure 35: Makeup of P.F. Chang’s menu, Q3 2010
                                                                                                                                                • Figure 36: P.F. Chang’s top five cuisine types, Q4 2009-Q3 2010
                                                                                                                                              • New menu additions
                                                                                                                                              • Marketing Strategies

                                                                                                                                                • Overview
                                                                                                                                                  • Widespread promotion of discounted meals
                                                                                                                                                      • Figure 37: Chili’s (Chili’s Grill & Bar) television ad, 2010
                                                                                                                                                      • Figure 38: O’Charley’s television ad, 2010
                                                                                                                                                    • Darden Restaurants: Drawing in workers for lunch
                                                                                                                                                      • Figure 39: Olive Garden television ad, 2010
                                                                                                                                                      • Figure 40: Olivegarden.com monthly visitors, March 2010-September 2010
                                                                                                                                                      • Figure 41: Red Lobster television ad, 2010
                                                                                                                                                    • Olive Garden: Targeting the family dining dollar
                                                                                                                                                      • Figure 42: Olive Garden television ad, 2010
                                                                                                                                                    • Applebee’s and Chili’s: Emailing promotions
                                                                                                                                                      • Applebee’s
                                                                                                                                                        • Figure 43: Applebee’s 2 for $20 e-mail, September 2010
                                                                                                                                                      • Ruby Tuesday
                                                                                                                                                        • Figure 44: Ruby Tuesday “Fresh” e-mail, August 2010
                                                                                                                                                      • Chili’s: A social networking case study
                                                                                                                                                          • Figure 45: Chilis.com monthly visits, April 2010-September 2010
                                                                                                                                                        • Red Robin: making the case for integrated campaigns
                                                                                                                                                            • Figure 46: Red Robin television ad, 2010
                                                                                                                                                            • Figure 47: Redrobin.com monthly visitors, February 2010-July 2010
                                                                                                                                                        • Menu Insights Analysis: The Casual Dining Menu

                                                                                                                                                          • Overview
                                                                                                                                                            • Menu items
                                                                                                                                                                • Figure 48: Top 10 casual dining menu items, by incidence, Q2 2007-Q2 2010
                                                                                                                                                                • Figure 49: Top 10 Casual Dining menu items, by incidence and price, Q2 2007-Q2 2010
                                                                                                                                                              • Menu ingredients
                                                                                                                                                                  • Figure 50: Top 10 casual dining menu ingredients, by incidence, Q2 2007-Q2 2010
                                                                                                                                                              • Menu Insights Analysis: Marketing the Casual Dining Menu

                                                                                                                                                                    • Figure 51: Top 10 ingredient marketing claims on casual dining menus, by incidence, Q2 2007-Q2 2010
                                                                                                                                                                    • Figure 52: Top 10 ingredient marketing claims on casual dining menus, by price, Q2 2007-Q2 2010
                                                                                                                                                                • Menu Insights Analysis: The Beverage Menu

                                                                                                                                                                  • Overview
                                                                                                                                                                    • Alcoholic beverages
                                                                                                                                                                        • Figure 53: Top 10 alcoholic beverages on casual dining menus, by incidence, Q2 2007-Q2 2010
                                                                                                                                                                        • Figure 54: Top 10 alcoholic beverages on casual dining menus, by incidence and price, Q2 2007-Q2 2010
                                                                                                                                                                      • Non-alcoholic beverages
                                                                                                                                                                        • Figure 55: Top five non-alcoholic beverages on casual dining menus, by incidence, Q2 2007-Q2 2010
                                                                                                                                                                        • Figure 56: Top five non-alcoholic beverages on casual dining menus, by incidence and price, Q2 2007-Q2 2010
                                                                                                                                                                    • Menu Insights Analysis: The Kids’ Menu

                                                                                                                                                                        • Figure 57: Top 10 kids’ menu items at casual dining menus, by incidence, Q2 2007-Q2 2010
                                                                                                                                                                        • Figure 58: Top 10 kids’ menu items at casual dining menus, by incidence and price, Q2 2007-Q2 2010
                                                                                                                                                                    • Casual Dining Restaurant Usage and Usage Frequency

                                                                                                                                                                      • Chains look to attract workers for lunchtime meal
                                                                                                                                                                        • Figure 59: Casual dining restaurants used for lunch, July 2010
                                                                                                                                                                        • Figure 60: Casual dining restaurants used for lunch, by age, July 2010
                                                                                                                                                                        • Figure 61: Casual dining restaurants used for lunch, by household income, July 2010
                                                                                                                                                                      • Olive Garden moves into top spot for dinner
                                                                                                                                                                        • Figure 62: Casual dining restaurants used for dinner, July 2010
                                                                                                                                                                        • Figure 63: Casual dining restaurants used for dinner, by age, July 2010
                                                                                                                                                                        • Figure 64: Casual dining restaurants used for dinner, by household income, July 2010
                                                                                                                                                                      • Adapting the menu to the size of the party
                                                                                                                                                                        • Figure 65: Casual dining check average and party size, July 2010
                                                                                                                                                                        • Figure 66: Casual dining check average and party size, by age, July 2010
                                                                                                                                                                        • Figure 67: Casual dining check average and party size, by household income, July 2010
                                                                                                                                                                    • Changes in Casual Dining Usage

                                                                                                                                                                      • Recession continues to impact diners
                                                                                                                                                                        • Figure 68: Change in casual dining usage, July 2010
                                                                                                                                                                        • Figure 69: Change in casual dining usage, by gender, July 2010
                                                                                                                                                                        • Figure 70: Change in casual dining usage, by age, July 2010
                                                                                                                                                                        • Figure 71: Change in casual dining usage, by household income, July 2010
                                                                                                                                                                        • Figure 72: Reason for reduced casual dining usage, July 2010
                                                                                                                                                                        • Figure 73: Reason for reduced casual dining usage, by gender, July 2010
                                                                                                                                                                    • Casual Dining Selection Factors

                                                                                                                                                                      • The menu reigns supreme
                                                                                                                                                                        • Figure 74: Important attributes for selecting a casual dining restaurant, July 2010
                                                                                                                                                                        • Figure 75: Important attributes for selecting a casual dining restaurant, by gender, July 2010
                                                                                                                                                                        • Figure 76: Important attributes for selecting a casual dining restaurant, by age, July 2010
                                                                                                                                                                      • Performance on par with what patrons cite as important
                                                                                                                                                                        • Figure 77: Casual dining restaurant performance on important attributes, July 2010
                                                                                                                                                                        • Figure 78: Casual dining restaurant performance on important attributes, by gender, July 2010
                                                                                                                                                                        • Figure 79: Casual dining restaurant performance on important attributes, by age, July 2010
                                                                                                                                                                        • Figure 80: Casual dining restaurant performance on important attributes, by household income, July 2010
                                                                                                                                                                    • What Consumers Would Like To See More Of

                                                                                                                                                                      • The healthy food dichotomy
                                                                                                                                                                          • Figure 81: Improvements for casual dining, July 2010
                                                                                                                                                                          • Figure 82: Improvements for casual dining, by gender, July 2010
                                                                                                                                                                          • Figure 83: Improvements for casual dining, by household income, July 2010
                                                                                                                                                                      • Attitudes Towards Casual Dining Experience

                                                                                                                                                                        • The full-service experience a valuable trump card
                                                                                                                                                                          • Figure 84: Attitudes towards casual dining experience, July 2010
                                                                                                                                                                          • Figure 85: Attitudes towards casual dining experience, by gender, July 2010
                                                                                                                                                                          • Figure 86: Attitudes towards casual dining experience, by age, July 2010
                                                                                                                                                                          • Figure 87: Attitudes towards casual dining experience, by household income, July 2010
                                                                                                                                                                      • Attitudes Towards Casual Dining Menu

                                                                                                                                                                        • Patrons appreciate interesting and unique menu offerings
                                                                                                                                                                          • Figure 88: Attitudes towards casual dining menu, July 2010
                                                                                                                                                                          • Figure 89: Attitudes towards casual dining menu, by age, July 2010
                                                                                                                                                                          • Figure 90: Attitudes towards casual dining menu, by household income, July 2010
                                                                                                                                                                      • Cluster Analysis

                                                                                                                                                                          • Advocates
                                                                                                                                                                            • Demographics and characteristics
                                                                                                                                                                              • Opportunity
                                                                                                                                                                                • Indulgers
                                                                                                                                                                                  • Demographics and characteristics
                                                                                                                                                                                    • Opportunity
                                                                                                                                                                                      • Lumpers
                                                                                                                                                                                        • Demographics and characteristics
                                                                                                                                                                                          • Opportunity
                                                                                                                                                                                            • Cluster characteristics
                                                                                                                                                                                              • Figure 91: Casual dining clusters, July 2010
                                                                                                                                                                                              • Figure 92: Important attributes at casual dining restaurants, by casual dining clusters, July 2010
                                                                                                                                                                                              • Figure 93: Improvements for casual dining, by casual dining clusters, July 2010
                                                                                                                                                                                              • Figure 94: Attitudes towards casual dining, by casual dining clusters, July 2010
                                                                                                                                                                                            • Cluster demographics
                                                                                                                                                                                              • Figure 95: Casual dining clusters, by gender, July 2010
                                                                                                                                                                                              • Figure 96: Casual dining clusters, by age group, July 2010
                                                                                                                                                                                              • Figure 97: Casual dining clusters, by household income, July 2010
                                                                                                                                                                                              • Figure 98: Casual dining clusters, by race, July 2010
                                                                                                                                                                                              • Figure 99: Casual dining clusters, by Hispanic origin, July 2010
                                                                                                                                                                                            • Cluster methodology
                                                                                                                                                                                            • Appendix: Trade Associations

                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                              • Brinker International Inc.
                                                                                                                                                                                              • Bugaboo USA
                                                                                                                                                                                              • Bureau of Economic Analysis
                                                                                                                                                                                              • Burger King Corporation
                                                                                                                                                                                              • California Pizza Kitchen Inc.
                                                                                                                                                                                              • Claim Jumper Restaurants LLC
                                                                                                                                                                                              • Darden Restaurants Inc.
                                                                                                                                                                                              • Facebook, Inc.
                                                                                                                                                                                              • Food Allergy & Anaphylaxis Network (FAAN)
                                                                                                                                                                                              • Food and Drug Administration
                                                                                                                                                                                              • Food Distributors International
                                                                                                                                                                                              • Food Marketing Institute
                                                                                                                                                                                              • Foursquare
                                                                                                                                                                                              • International Food Information Council Foundation (IFIC)
                                                                                                                                                                                              • International Food Service Executives Association (IFSEA)
                                                                                                                                                                                              • International Foodservice Distributors Association (IFDA)
                                                                                                                                                                                              • International Foodservice Manufacturers Association (IFMA)
                                                                                                                                                                                              • International Franchise Association (IFA)
                                                                                                                                                                                              • International Fresh-Cut Produce Association (IFPA)
                                                                                                                                                                                              • McDonald's U.S.A.
                                                                                                                                                                                              • Metromedia Restaurant Group
                                                                                                                                                                                              • National Basketball Association
                                                                                                                                                                                              • National Council of Chain Restaurants (NCCR)
                                                                                                                                                                                              • National Restaurant Association (NRA)
                                                                                                                                                                                              • National Retail Federation (NRF)
                                                                                                                                                                                              • Pizza Hut Inc
                                                                                                                                                                                              • Produce Marketing Association
                                                                                                                                                                                              • The Cheesecake Factory Incorporated
                                                                                                                                                                                              • The Vegetarian Resource Group
                                                                                                                                                                                              • Twitter, Inc.
                                                                                                                                                                                              • U.S. Bureau of Labor Statistics
                                                                                                                                                                                              • U.S. Department of Agriculture
                                                                                                                                                                                              • Weight Watchers International Inc.
                                                                                                                                                                                              • YouTube, Inc.

                                                                                                                                                                                              Casual Dining - US - October 2010

                                                                                                                                                                                              £3,174.67 (Excl.Tax)