After years of underperforming, casual dining seems to have hit its stride this year. Chili’s is posting record-breaking same-store sales and traffic growth, while others, like Applebee’s, switched from negative to positive sales growth this year. Value moves by casual chains have put the segment in direct price competition with fast food and fast casual — to the other segments’ detriment.
Black Box Intelligence data shows that after two years of being the second-worst performer in the restaurant industry, casual dining is now the best-performing segment as of August. This change is significant, as fast casual chains struggled to boost sales and fast food chains continue to push value menus to try and bring back lapsed traffic.
“On a two-year basis, Casual Dining remains by far the industry’s best-performing segment, showing its success goes well beyond easy comparisons,” Black Box Intelligence said in its August report. “Large, legacy brands in this space have excelled by delivering what guests want: a good meal, a pleasing experience, and a price that feels worth it.”
Many chains have been rolling out affordable items, as well as smaller portions, to appeal to a wide range of consumers across income cohorts. And it’s working. Olive Garden, which has been testing smaller menu items at reduced price points, saw traffic growth among consumers of all income brackets during its fiscal Q1.
Check out how casual chains are leaning into consumers’ desires to eat out for less.
Applebee’s
After an extended streak of same-store sales declines, Applebee’s managed to return to traffic growth and saw a 4.9% increase in same-store sales in Q2. Key to that turnaround is the brand’s efforts over the last few quarters to improve its value perception. The chain’s 2-for-$25 promotion, a long-standing pillar of Applebee’s value offerings, has boosted performance, Dine Brands’ CEO John Peyton told investors on the company’s most recent earnings call.
In addition to a pure value play, the 2-for-$25 offering is also a tool for menu innovation, Peyton said. The brand has added new entrees to its menu, using the 2-for-$25 deal to promote trial.
“In Q1, we introduced our Bourbon Street Cajun Pasta. In Q2, we introduced New Skillets & Steak. And a few weeks ago, we debuted our Chicken Parmesan Fettuccine, all within our ‘2 for’ menu,” Peyton said, adding that this was a key tactic to drive sales growth.
The focus on core menu items, or full-meal value, is similar to Chili’s value moves, which arguably kicked off the casual dining value renaissance. And the 2-for-$25 platform is something of a departure from previous Applebee’s value plays, like the drinks-focused Dollarita, which ran last year but was subsequently discontinued.
The Cheesecake Factory
The Cheesecake Factory added two menu categories this year with the launch of bowls and Bites. The bowl menu offers six items that are priced below $20, according to menu prices at a Virginia Cheesecake Factory.
The Bites menu features eight small plates “at an attractive price point,” CEO David Overton said in a July earnings call. Prices vary by location, but range from about $6 to $11.
“With items like New Orleans Cajun Shrimp, Chicken and Biscuits and Meatball Sliders, these new offerings reinforce the relevance of our menu and the strength of our innovation strategy,” Overton said.
These additions came months after the chain overhauled its menu, adding 22 items and removing 13. The chain reported a 1.2% increase in same-store sales during the second quarter and boasted record-high average weekly sales. Menu innovation will continue to be a key driver of its success, Overton said.
Denny’s
Denny’s has shifted its value focus toward whole meals with its 5 Slams for $5 promotion, which runs through October. The $5 Slams promotion followed a different value promotion, the $2-$4-$6-$8 platform that CEO Kelli Valade told analysts effectively allowed consumers to hack the chain’s menu.
That experience pushed Denny’s to focus on its Slams — breakfast combo meals — in different promotions over the summer, thereby pushing the order incidence of its Super Slam meal to all-time highs, according to the chain’s most recent earnings call.
It’s not yet clear if Denny’s focus on full meals as a value play will push it out of the sales doldrums: The chain posted a 1.3% decline in same-store sales last quarter, and will not announce the results of the quarter encompassing the 5 Slams deal for some time. Still, the moves by the diner brand are indicative of the overall trend within casual dining toward direct price competition with QSRs on whole meal offerings.
IHOP
Like competitor Denny’s, and sister-brand Applebee’s, IHOP is increasing its emphasis on whole meals as part of its value offerings. The brand first added a $6 meal deal last fall as a way to spur traffic on weekdays. But earlier this month, IHOP expanded the availability of that menu to the weekends, offering consumers a choice between four meals, each priced at $6 or $7 depending on the market, every day of the week.
IHOP has struggled to generate sales momentum through much of the year, and after outperforming Applebee’s throughout much of 2023 and 2024, the brand’s same-store sales figures have fallen behind Dine Brands’ other flagship.
Olive Garden
The casual Italian chain has been testing a section of lower-priced, lighter portions of seven existing entrees. These items are available during dinner on weekdays and all day on the weekends. The lighter menu was in about 40% of the chain’s system as of mid-September. Guest feedback so far has been positive, and affordability scores increased by 15 percentage points, CEO Rick Cardenas said in a September earnings call.
Cardenas said that the chain expects the lighter menu items to help drive traffic, even if checks decrease slightly with people trading from regular portions to the smaller portion size. Traffic could increase further, as the chain has yet to market the offering, rolling it out at restaurants without much promotional activity.
Alongside a boost from its expanding delivery channel, Olive Garden posted a 5.9% increase in same-store sales during its fiscal Q1, marking its fourth quarter in a row of same-store sales growth.
P.F. Chang’s
This week, the Asian chain added half appetizers, smaller entrees and a collection of $8.99 cocktails as a way to expand its menu with more affordable options. The half appetizers offer a fairly significant discount over full appetizers. At a Fairfax, Virginia, restaurant, a half portion of Chang’s Chicken Lettuce costs $9.29 compared to a full portion at $16.59. Guests can also pick a medium entree portion, which comes at a reduced price compared to a traditional sized entree.
Earlier in the year, P.F. Chang’s added its Lunch and Dinner Specials. Lunch Specials include a soup or salad, an appetizer, base and personalized entree portion starting at $13.99. Dinner Specials, which start at $16.99, allow the guest to mix and match starters, bases and entrees, choosing from 12 options.
