Fresh ideas: as demographic shifts erode the segment's traditional customer base, family-dining leaders are revamping their concepts and making plans to woo a younger demographic

Nation's Restaurant News,  July 30, 2007  by Milford Prewitt

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Like senior citizens dancing the Electric Slide at a grandchild's wedding reception and then having a video clip posted on YouTube.com to prove it, the family-dining segment is busting loose in its old age.

Reading demographic tea leaves that indicate the segment might be severely impacted in the next 15 years when millions of baby boomers begin leaving the workforce or dying, family operators are making plans now to cater to a younger crowd.

In what looks to be a virtually segmentwide transition, family-dining operators are rethinking every element of the business to target consumer bases not normally chased by the segment, such as office workers, home-based business entrepreneurs, club kids, nightclub prowlers and trend addicts who must have the hottest CDs.

With mounting research suggesting that the traditional nuclear family will be declining as a percentage of total households in the years to come, operators are also rethinking their allegiance to families and even the breakfast daypart and breakfast foods--historically the dominant sales driver of the category.

Up until now, "hip," "cool," "trendy," "urbane" and "tech-savvy" were words that never appeared in the same sentence with family dining.

But all that is changing as the oldest segment of the restaurant industry is breaking out with a new attitude about its business.

Even with combined sales up about 2.3 percent to $12.5 billion in 2006 for the 16 chains whose U.S. systemwide volumes qualified them for rankings within the Nation's Restaurant News Top 200 universe this year, many brands may already be experiencing a flat rate of growth due to demographic and consumer shifts beyond the segment's control.

Overall, the 16 family-dining chains measured in NRN's annual census represent about 6 percent of the combined systemwide sales of $219 billion for the 200 brands in the Top 100 and Second 100.

Looking to get a larger slice of that pie and also investing today for a payoff tomorrow, family-dining chains are not only pursuing nontraditional consumer groups for the segment, but they are rolling out branch prototypes that look nothing like the coffee shops, log-cabin pancake houses or burger hangouts of their past. Instead, several brands are boasting about reimaging campaigns with prototypes featuring more glass, steel and even zany shapes and angles. Even staff uniforms are being updated to look cooler and more fashionable.

Wi-Fi connectivity is becoming a commonplace amenity throughout the segment.

Perhaps most dramatic of all, a small number of brands, including Cracker Barrel Old Country Store, have seen lunch and dinner eclipse breakfast as their dominant sales drivers.

From top executive leaders of major national brands like Denny's to regional-but-ancient powerhouses like Big Boy to one-city chain favorites like Pittsburgh's King's Family Restaurants, confirmation is coming that their brands are in the midst of historic change. Such chains say they are gearing up to be more in tune with the times and to cater in a more timely fashion to consumer demands that did not exist when the category first began to emerge some 75 years ago.

But in transitioning to more modern stylings in looks, food and locations, family dining is encroaching on--and being encroached on by--casual dining, still the fastest-growing and most popular category of full-service restaurants.

Consider these brand-specific developments being implemented by family-dining operators to cater to younger, trendier and more urban-based diners:

* Twenty-four-hour locations, sometimes in urban neighborhoods, long the exclusive preserve of Denny's or Shoney's, are increasingly giving IHOP, Cracker Barrel and Big Boy some of their highest-volume operations.

* More urban development and less growth in suburbs, highways or rural areas are improving same-store sales averages for IHOP, Big Boy and Denny's. In fact, one of the highest-volume IHOP units, which happens to operate around the clock Thursday through Monday, is in Harlem, Manhattan's historic black community. Moreover, IHOP is boasting about the strong annual performance at its branch on I-635 and Josey Lane in Dallas, which plays to a young, multiethnic audience 24 hours a day.

* Hipper-sounding marketing messages and market promos, at Denny's, for example, represent a marketing push aimed at young and college-age kids, urging them to "Get Your Crave On." Meanwhile, at Cracker Barrel, country music sensation Josh Turner has released a new CD exclusively through the restaurants' adjacent gift shops--a marketing agreement similar to the one Starbucks has formed with jazz great Herbie Hancock and exBeatle Paul McCartney.

* Wi-Fi connectivity, not only for budget-conscious college kids and the Internet addicted, but also for office and medical professionals, is giving Big Boy and King's Family Restaurants access to newer consumer bases.

"Family dining, perhaps more than any other segment in foodservice, is looking for ways to remain relevant," says Barb Churchill, a founder and partner at Louis & Partners Design, a Bath, Ohio-based firm that has helped IHOP and is helping King's Restaurants roll out more sophisticated prototype outlets.