First Bite

There have been many iterations of eatertainment over the years. It began with stalwart chains like Chuck E. Cheese and Dave & Buster’s, places to play arcade games and win tokens that would lead to prizes.

Over the past 10 years, that idea has been flipped. Eatertainment had moved onto larger-scale games like bowling and pool. Chains like Punch Bowl Social, founded in 2012, were also focused on offering upscale food and drink in a hipper environment.

Following the struggles of Punch Bowl Social, which filed for bankruptcy in December 2020, a new class of eatertainment venues have arrived. For the most part, they are concepts based on sports ranging from golf to pickleball to bowling. They’re just as focused on elevated food and drink offerings as their predecessors, but the concepts focus on just one or two larger-scale games rather than several.

With the focus on just one game, these eatertainment concepts have been able to drill into what makes each brand special. For most of them, it’s technology that elevates gameplay.

Restaurant value used to be a much simpler calculation: Discount-driven customers would seek out dollar meals at quick-service restaurants, call for pizza delivery on Friday nights (sans delivery fees), and then splurge on full-service meals on rarer occasions. But in 2024, with dollar menus all but extinct, and newer variables like convenience pricing, service fees, shrinkflation, and dynamic pricing in the mix, the consumer value equation has never been more complex.

Or has it? Customers may have more options than ever before, from ordering almost any food they want from the comfort of their own home to choosing to dine out “the old-fashioned way” (and every “channel” in between), but spending habits have not changed as much as we might think they have. According to data from Technomic, customers are roughly as price-conscious now as they were just before the pandemic. In a survey, half of customers said that they picked restaurants with lower prices in Q1 2020, while 52% of customers said they do so in Q1 2024, and the exact same percentage of customers (68%) said they pay close attention to menu prices in both Q1 2020 and Q1 2024.

Red Lobster abruptly closed some 87 restaurants on Monday as the chain faces apparent cash-flow issues and loss of confidence from its largest owner. USA Today compiled a list of all of the shuttered restaurants listed on the chain’s web site. The closed locations are in 28 states, with the largest number, 16, in its home state of Florida, including three in Orlando.

Auction site Tagex has listed 48 closed Red Lobster locations and has put all of their contents up for sale in an auction scheduled to end on Tuesday. They’re “Winner Takes All” auctions, meaning buyers are bidding on the total contents of each restaurant.

Thai Union, which has long been a large minority shareholder in Red Lobster, said in January it would sell its stake in the company and has reportedly been looking for buyers ever since.

Since we’re officially more than halfway through Q1 earnings reports, it’s fair game to derive some of the winners from the start of 2024. Unquestionably among them is Chipotle, which experienced a 7% increase in same-store sales driven in large part by a 5.4% increase in traffic.

To understand the secret of Chipotle’s momentum of late, it’s important to understand its sharpened focus on throughput. Indeed, the word “throughput” was mentioned 33 times during the company’s earnings call April 24. Unsurprisingly, several brands, from Cheesecake Factory to Starbucks to Portillo’s, have noted a more intentional prioritization of throughput, because why wouldn’t they want to emulate Chipotle’s recent success? That said, they all have some catching up to do to get on the same playing field as Chipotle.

Andy Wiederhorn — former CEO and current chairman of FAT Brands — has been accused by the U.S. Securities and Exchange Commission of misappropriating $27 million of company money and using it to “fund his lavish lifestyle,” a complaint filed on May 10 by federal prosecutors in the Central District Court of California reads.

The complaint was filed three months after the SEC concluded its investigation into Wiederhorn, who was being inspected by federal authorities under allegations of securities and wire fraud, money laundering, and attempted tax evasion. This is not the first time Wiederhorn has run afoul of federal law: he previously served time in prison for tax fraud from 2005-2006. In 2023, he stepped down as CEO of the company, but has still been running earnings calls since then. 

TikToker “MiriTheSiren” was known for posting her creative Chick-fil-A meals, videos that were meant to inspire consumers to think of innovative ways to eat fast food. The TikToker, whose real name is Miri, was a Chick-fil-A employee, sharing how she mixed items at the store for her free meal every day.

Quickly, Miri gained a following with her videos going viral, garnering tens of millions of views on her videos between January and April of this year. But Chick-fil-A wasn’t happy.

The Atlanta-based chicken chain made Miri stop posting videos because they violated the employee handbook, as she explained, and the company would not be making an exception for her or collaborating on any future posts.

“People do that stuff as it’s convenient, and they back-burner more often,” said Lena Katz, lead, creator-integrated services at Ampersand (AOI-Pro). “Once one side begins to feel exploited, the relationship sours or ends.”

Los Angeles-based Sweetgreen is besting many of its restaurant competitors in the first quarter. The fast-casual chain reported 5% same-store sales increases and a 26% revenue increase year-over-year.

Sweetgreen CEO Jonathan Neman stated that while January was tough with weather, the benefit of two holidays in the first quarter was a boon to business.

The quarter, ended March 31, saw most of its success from 41 net new store openings over the past year, resulting in $21.1 million in additional revenue.

CFO Mitch Reback mentioned that Sweetgreen was impacted by AB1228, increasing wages in late February. While it’s too early to see the full results, he said, the brand has made some adjustments.

Papa Johns’ customers are spending less than they had previously, and when they do spend money on pizza, they are more likely to choose third-party aggregators over the company’s first-party delivery channels. This shift in mix balance was a primary driver behind the Atlanta-based pizza chain’s 2% decline in North America same-store sales, as well as revenue and overall sales deflation for the first quarter ended March 31, 2024.  

Sales from aggregator channels have grown to 16% this quarter, as compared with 12% the same quarter of 2023, meanwhile organic delivery has declined year-over-year, while carryout remains flat. This highlights the quandary operators face when utilizing third-party apps: they are crucial to pull in new and non-regular customers, but operators lose revenue from these transactions.  

Dine Brands’ first quarter results included same-store sales declines at both Applebee’s (-4.6%) and, for the first time in 11 quarters, IHOP (-1.7%), highlighting a continuing narrative across the industry about increasing consumer sensitivity. Despite a few exceptions, that narrative has impacted concepts across segments, from McDonald’s and KFC to First Watch and Starbucks.

At a time when many restaurant companies are struggling to get customers in the door, Dutch Bros is one of the better success stories for the first quarter of 2024. In Q1, the Oregon-based coffee chain saw 10% same-store sales growth, attributable mostly to menu pricing increases, discounting, and positive traffic trends.

Traffic will likely continue an upward growth trajectory after Dutch Bros starts accepting mobile order and pay, which the company will begin offering for the first time by the end of 2024, in partnership with Olo. The new partnership and mobile order and pay solution is currently in test mode at seven locations, and is meant to boost operational efficiency, especially for guests that want to cut down on wait times at the drive-thru lane.