The full-service restaurant industry is getting burned by lower-cost rivals.
Sit-down restaurants like TGI Fridays and Red Robin (RRGB) are losing their hold on American diners as reflected in the latest American Customer Satisfaction Index, which tracked the lowest score for the category in more than 10 years. For the first time, fast-food restaurants are actually scoring higher in consumer satisfaction than their higher-end rivals, the report said.
The fast-food industry is innovating through chains such as Panera (PNRA), which offer a bridge between traditional burger restaurants and more expensive sit-down chains. At the same time, consumers are increasingly skipping the mall, where many of the big American full-service restaurants have key locations.
Delivering a satisfying experience may also be more challenging for table-service restaurants, given that customers will want to feel the meal is worth the additional cost.
“The quality of quick-service or limited-service options have grown so much over the years. When people think fast food, it’s not just McDonald’s or Wendy’s any more,” said ACSI director David VanAmburg. “We’re seeing prices rise in the full-service side of the business, and that’s adding to their challenges going forward.”
Customer satisfaction with full-service restaurants slipped 3.7 percent to 78 points on the ACSI’s 100-point scale. Fast-food chains, by comparison, held steady at 79 points. The results are based on a survey of almost 5,600 customers between June 2016 and May 2017.
Demographic changes may be partly to blame. Millennials, the biggest generation in America, prefer to cook at home or spend less on eating out, which may be giving fast-casual chains like Panera a boost. Meal-kit services such as Blue Apron may also be squeezing sit-down restaurants, given some consumers’ desire to make their own meals with recipe kits.
A few restaurant chains are doing a better job than others in serving up a satisfying experience, the…