Andy Saarima says he hasn't been to a "subpar" restaurant such as a Chili's or Applebee's in more than a year. The 29-year-old Chicago bartender would rather eat at Five Guys Burgers and Fries: "There are just so many smaller, faster options with way better food."
American twentysomethings are snubbing the restaurant chains their parents took them to as kids. Chili's, Applebee's, Ruby Tuesday (NYSE: RT - News), and other so-called casual-dining chains are already struggling to revive sales in the wake of an epic recession. Now they risk losing an important consumer demographic group unless they remake themselves. "If you have a little bit of money and you're educated, you want a boutique feel, less chain," says Brad Swanson, who runs the restaurant group at KeyBanc Capital Markets, an investment banking and equity research firm.
The casual-dining chains, which serve reasonably priced sit-down meals, are losing customers to such "fast-casual" upstarts such as Five Guys, Chipotle Mexican Grill, and Panera Bread (Nasdaq: PNRA - News), which offer counter service, trendy menus, and not much else. Sales at full-service restaurants, which include casual dining, fell 1.3 percent, to $166 billion last year, vs. a 6 percent rise for fast-casual chains, says researcher Technomic. (Businessweek)Mom: "But you patronize Chick-Fil-A"
Me: "Chick-Fil-A. Is. Godsent."