For more than half a century, Denny's has represented the essence of a small set of casual dining chains devoted to older, more likely blue-collar customers just as interested in breakfast as they are in other daily meals.
Now, millions of Grand Slams and tons of sausage grease later, Denny's officials have mixed things up bit by adding a fast casual concept called Fresh Express, hoping to boost revenue with an image makeover and a strong appeal to diners demanding flavor with a side of convenience.
Denny's execs have reformulated some of their better-known menu items into quicker and more convenient formats. For example, Denny's took their Grand Slam breakfast and tweaked it into a "Grand Slamwich" concept.
"Customers are being more driven by convenience and (Fresh Express) is an opportunity to stretch out there to them and develop a concept that is still about Denny's but differentiates it for today's consumer," said Greg Powell, vice president of concept innovation for Denny's.
"There's a brand bridge between Denny's and Fresh Express," he said. "Breakfast has grown in importance, but during the week Denny's may not be the most convenient option out there. Fresh Express can capture that business."
The changes come as Denny's struggles to regain its footing in the wake of slipping sales and a weak economy. For the company's third quarter ended Sept. 24, same-store sales fell 2.7 percent at company units and fell 6.1 percent at franchised units, and year-to-date revenues were off 20 percent.
Denny's opened three Fresh Express units in the Dallas metropolitan area within the last year. So far, they've been successful, Powell said.
"We've focused on our core customer, but the brand is now serving people differently — it now stresses the consumers' time and budget," he said.
Concepts catching on
Denny's, and other casual dining companies eyeing fast casual, hope that the lower price point will attract customers battered by the struggling economy.
"In a lot of cases, fast casual is a segment that is really booming — even with the economy — they are still holding up fairly well," said Michael Schaefer, a consumer food-industry analyst with the research group Euromonitor International.
California Pizza Kitchen has had success with the model. The company opened its first fast casual concept, CPK ASAP, in 1996, which has increased to 25 total locations. The majority of the CPK ASAPs are located in airports, which Shaefer said is actually a very attractive venue for testing out a new fast casual concept because of the "captive consumer base."
"There is less competition because of space constraints and pricing power because people can't leave," he said. "Plus the type of clientele is more affluent, cosmopolitan and international and (a company) can bring to a new group of consumers. We're seeing that not just in the U.S."
Powell said Denny's is looking into airports and colleges as possible venues for the future. Denny's officials selected the Dallas-Ft. Worth area because the company already had a strong presence there, with a previous total of 15 units. The company is considering offering the Fresh Express concept to franchisees.
Finding a balance
While the current economic situation has casual dining operators taking a look at fast casual concepts, it also is forcing several operators to scale back plans to try out the segment.
Taleo Inc., a fresh Mexican restaurant chain based in Irvine, Calif., announced in late July it would open up to 43 Via! Taleo fast casual concept locations, primarily in the company's home state of California. Back then, Taleo Inc. President Nic Villareal said with successes like California Pizza Kitchen's ASAP fast casual model and PF Chang's Pei Wei for Asian cuisine, Via! Taleo could fill a Mexican cuisine niche that would compete with the Chipotle brand.
In July, Villareal launched the company's Via! Taleo concept, which would complement its larger locations with a $7-$10 price point.
That was then. Now, with the economy in its current shape, Villareal's plans have been pushed back extensively.
"Right now the most difficult thing is capital," Villareal said recently. "People are just not investing the dollars. We were looking at trying to open one in November. That's not going to happen. We were hoping to open 11 in 18 months. That's definitely not going to happen. I'd be surprised if we got one open by summer."
And P.F. Chang's China Bistro Inc. announced Oct. 22 it was closing 10 Pei Wei stores as part of ongoing profitability initiatives during the fourth quarter of 2008.
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Although still very much a "work in progress," Powell says the new Denny's concept is "a shock to a lot of our customers." That unfamiliarity with the new concept has been one of the only hurdles to the Fresh Express concept.
"The challenge for us is getting our customers to break from the ‘What is this?' questions," said Powell. "When you have a customer used to being served one way, and a new menu comes at them, with a new concept model, that's the biggest hurdle."
