Fast-food eateries cooking up fresh looks
Face-lift fever is sweeping the fast-food industry as aging establishments swap ketchup-smudged Formica for mood lighting and gleaming stainless steel — all in the pursuit of profit.
In a tough economy, picky consumers are being selective about where they spend their cash. Many tired outlets are losing sales to flashier competitors, experts said, forcing them to spruce up or lose out.
Taco Bell is testing eateries, including one in Redwood City, Calif., that glow purple at night to attract the bar crowd. At some McDonald’s, customers nosh on dollar-menu items while watching televisions from sofa-like faux leather chairs.
A newly remodeled Burger King in Glendale boasts glossy red walls, matte-black furniture and recessed alcoves, evoking a Las Vegas club. Giant photos of luscious food are framed to look like art. A curved, raised bar faces a flat-screen television tuned to celebrity-focused TMZ.
McDonald’s was one of the first to try something different, refurbishing a New York City outlet three years ago with Danish Modern furniture, flat-screen TVs and free Wi-Fi, along with tables and outlets for working customers.
Most other large chains tried to hang on to patrons by updating their menus with more body-conscious ingredients and fancier dishes. And some tried to up their hip quotient with technology and social media.
It wasn’t until this year, though, that major fast-food companies began to realize, en masse, that they also had to do something about ugly restaurants.
What they discovered was that full-scale revamps could attract more customers, with remodeled stores often producing double-digit increases in monthly sales over branches that weren’t upgraded.
“The feeding frenzy of new concepts is really forcing existing restaurants to raise the bar and re-image,” said Rachel Rosenberg, executive vice president at commercial real estate services firm RKF. “They can’t build a business based on what they’ve been doing in the past, even if it’s worked.”
In Irvine, a prototype Del Taco store has scrapped the early Mexican style confetti-painted walls, the vinyl floors and the metal cactus-shaped chairs bolted into the ground, cafeteria-style.
In their place: cloth-backed blond wood booths, sleek red lights and bold lime-green chairs that evoke the fresh tomatoes, lettuce and corn used in the food. Tables and chairs can be moved around to adjust for larger groups.
The stone detailing on the walls is splashed with sunlight from the floor-to-ceiling windows. Instead of scattered sauce packets, condiments are served from pump jars at a stand-alone salsa bar with a tile backsplash.
“This seems more like an upscale restaurant,” said customer Jason Justice, 26, a Lake Forest video game developer. “I would drive out of my way to go back to this one for the atmosphere.”
The 30-year-old Panda Express chain has tested dozens of remodeled stores this year in its effort to develop a more visceral effect, said Tabassum Zalotrawala, the chain’s vice president of architecture and engineering.
One concept that the chain calls Bright and Fresh has a contemporary feel with LED lighting, digital menu boards and a combination of cozy booths, individual seats and community tables. Another design, dubbed Blocks of Flavor, features warmer colors, low benches and a more modern vibe.
“The buildings are the billboard of our brand,” Zalotrawala said. “As we’re elevating the customer experience through the menu strategy, it’s also important that we do the same for ambience.”
McDonald’s, known for a kitschy play palace aesthetic, recently began gearing itself more toward parents. In prototype stores worldwide, the chain commissioned top-tier designers to put in intimate padded nooks, glossy futuristic detailing, airy wooden exteriors and bar seating.
“The market has dictated that although kids are a coveted market, adults spend the most,” said Nima Samadi, an analyst with research group IBISWorld. “Restaurants are trying to cultivate a healthier, more upscale reputation and they want their decor to reflect that.”
That means also catering to voyeuristic foodies, who have spread the word about higher-end establishments by snapping smartphone photos and uploading them onto social media sites with messages about their dining experiences.
In Domino’s Pizza’s recently launched “store of the future” concept, open kitchens show off pizza makers at work. At dozens of stores, the Pizza Theater design also comes with comfortable lobby areas, chalkboard feedback stations and electronic ordering kiosks.
The push to revamp restaurants has come partly from new chains crowding into the market, jostling for available space and extending a real estate crunch. Finding good land — and bank loans — for new units is still a daunting proposition for restaurant companies.
“It’s less expensive to revise a unit than to rebuild a whole new one,” said Warren Solocheck, an analyst with the NPD Group.
Franchisees end up footing the remodeling bills, but many companies are offering incentives such as financing help, royalty reductions and discounts on franchise fees.
Wendy’s is setting aside roughly $750,000 for each of the 48 units slated for a refresh this year. And with 19 new stores en route, the chain expects to spend up to $85 million this year sprucing up its image.
Next year, it will offer $10 million in perks for franchisees that remodel.
And the returns seem promising so far, chains say.
Wendy’s said average sales volumes for remodeled branches are already up more than 25%. Sbarro said revenue at its modernized stores is 10% higher than existing ones.
Burger King, which plans to have 40% of its North American stores refreshed within three years, said updated branches have seen sales 15% above comparable locations on average. The chain said it doesn’t plan to pass on the costs of its system-wide makeover to guests through higher menu prices.
Other restaurant chains also are in remodeling mode. Sit-down chains, which were hit harder by the recession and have taken longer to recover, are facing many of the same market pressures as fast-food companies.
Companies such as P.F. Chang’s are changing the ambience in their restaurants, inspired by “elements in high-end casual and low-end fine dining restaurants,” said Chief Executive Richard L. Federico.
The P.F. Chang’s Innovation Bistro concept in Irvine is “the best performing store in the entire system by a long shot” with a double-digit percentage advantage over the rest of the chain, Federico said. He would not provide specific figures.
Mimi’s Cafe has set up a French-themed prototype restaurant in Santa Clarita, aimed at giving guests “more and different reasons to come in,” said Mark Mears, the company’s president.
“We live in a Food Network culture,” Mears said. “People don’t just want a meal; they want an experience.”
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