Foodservice: Serving up value
One of the things that sets family steakhouses apart from their high-end brethren is very simple: cost. A dinner for two at a big-name, high-end steakhouse can easily hit more than $200 before you even get to dessert. Plus, the time spent there can approach hours. While some people can afford that and would enjoy a long leisurely dinner, other consumers have time and budget limits. That’s where the family steakhouse comes in.
“If you go to Morton’s, be ready for three hours and a big check,” says Kerry Kramp, chief executive officer of Sizzler USA, headquartered in Culver City, Calif. “We’ve got such a broad range, someone who’s on a quick time schedule and big budget, or someone with a lot of time and small budget can enjoy themselves.”
Restaurants like Sizzler and fellow steakhouse chains like Western Sizzlin, Outback Steakhouse and others work to exploit that small but profitable gap among dining concepts.
“We pride ourselves in serving the same high-quality offerings found at high-end steakhouses in an unpretentious environment at an affordable price,” says John Comstock, director of marketing for Roanoke, Va.-based Western Sizzlin. “The same holds true in comparing our concept to the casual-dine establishments. We believe that a quality meal served in a clean, comfortable restaurant should not cost $30 per person.”
Of course, that’s not to say there aren’t risks involved. One of the big national stories in recent months was the bankruptcy of Plano, Texas-based Metromedia Restaurant Group, the parent company for Bennigan’s, Steak and Ale, Ponderosa and Bonanza chains. The Chapter 7 filing right now affects only the Bennigan’s and Steak and Ale concepts. Ponderosa and Bonanza still operate under Metromedia Steakhouses Co.
Another challenge is the economic climate. Many restaurant companies not in the quick-service (QSR) channel have had a challenge in meeting stockholder expectations when gas and commodities prices shot up earlier this summer.
Staying strongDespite the turmoil with other companies, family steakhouses are continuing to set themselves apart and gain customers.
“It is definitely a cause for concern to see a competitor file bankruptcy, but we are confident that if we can continue to please our guests we will be around for the long haul,” says Comstock. “It really comes down to the basics; hot food hot, cold food cold, served with a smile in a clean, well-maintained, comfortable restaurant with great price/value and the highest quality available.”
Sizzler has faced similar challenges in its half-century history. The chain went bankrupt itself in the 1990s. Since coming out of bankruptcy and re-emerging as a player in the market, it is working to ensure the quality of menu items to maintain and grow its market position. Kramp explains that the company has worked with its vendors and suppliers to be more creative and efficient with items, including portion size.
“I think a lot in the industry are looking at how to reduce portion size,” he continues. “We’re making sure we’ve got the right sized portion. A lot of times in a concept like this, you can get little extra items that add to the price.”
In future months, Sizzler will debut a value-pricing strategy that will give consumers a range of choices from salad and water for lunch to a celebration of lobster and steak.
In a bit of a twist for a steakhouse, it is Sizzler’s salad bar that is the company’s biggest way to break out from the pack. Kramp says that the presence of the bar allows a lot of flexibility in serving customers of different tastes and incomes. Since customers are looking more at portion sizes for health and financial reasons, the spectrum of options with the salad bar compliment the different cuts and leanness of the steaks offered by the chain.
Western Sizzlin, on the other hand, keeps to the meat of the matter for their trademark item.
“Our 8-ounce Sizzlin Sirloin is the steak that made us famous,” Comstock says. “It is Flamekist, seasoned with our signature Goldust seasoning and served up tender and delicious. Our Flamekist cooking method which sears the steak top and bottom, locking in the flavor, is the reason that we have been in business for over 45 years.”
Having said that, however, Western Sizzlin doesn’t leave salad lovers out in the cold. As interest in healthier foods rises, the company makes sure to highlight its own salad-bar options. Consumers can even replace traditional sides with steamed vegetables on request.
Meeting the challengeWith the availability of options and the competition among restaurant chains in general, the biggest challenges for family steakhouses is appealing to the core demographic, those 18 to 34 years of age.
“We are seeing the senior crowd and young families dining with us, but that middle group is tough for us to attract,” says Comstock. “With no alcohol, we just don’t attract that crowd. It is also tough for us to maintain our current customer base that is looking for a value-priced meal. The balance between profitable restaurant and value-priced offerings is getting tougher and tougher to achieve.”
Kramp adds that the company has to appeal to all different ranges of desires without shorting anyone’s needs.
In response to some QSRs making moves by coming out with items such as Angus beef hamburgers, family steakhouses aren’t too worried.
“We have been serving Angus for years at better prices,” says Comstock. “I think that the QSR segment has been forced to address the quality perception of their menu with so much competition. Let’s face it, Angus is the best marketing ploy to come along in years.”
He does say that the fast-food chains should get credit for making Angus beef a household name, but Western Sizzlin already promotes Angus beef items whenever possible.
The interest in natural and organic foods hasn’t had a great affect either. Neither Western Sizzlin nor Sizzler has made a concerted effort to add natural or organic items to menus.
“I think there’s a place for that in time,” says Kramp. “I think the premium on them and the economy has dampened it for now. There’s a bit of a scarcity of supply. We would love to be able to have â€” and we’ve thought about doing â€” seasonal salads and organic, but when we think about the value equation, the prices haven’t gotten in line yet.”
The companies are looking at it as an option, but have yet to see an advantageous position to enter that market.
Custom mealBoth chains have seen individual and regional taste as the upcoming trends for family steakhouses.
Kramp says that bundled combos, such as steak and shrimp, are gaining interest. The dishes may have smaller portions but a greater variety of taste.
“You can see it in multiple concepts, but people like to have varying degrees of flavor,” he says. “We’re finding people like different kinds of steak sauces, dips and more. They want to customize meal to their taste.”
Sizzler offers different seasonings and dips to cater to that demand.
How those consumers like their meals can also depend on the area of the country they’re in. Western Sizzlin has been looking at including smokehouses and barbecue for locations. But such a move can be tricky. Right now, the company is looking at how the idea develops and at the costs for equipment and maintenance.
“Smokehouses and barbecue are tough to pull off on a national basis because of regional preference,” says Comstock. “A menu item or flavor that is popular in one locale may not move well one state over. I think that smokehouses can be extremely popular in a specific location but will underperform in others.”