Online, reopenings, changes, outdoor on the mind
Bittorf says TGI Fridays is generating about four times the number of online orders than it did pre-virus. The company responded by improving the functionality and taking a microscope to rewards.
Part of TGI Fridays' turnaround strategy in January was to triple the size of its active rewards base and increase frequency by at least 25 percent.
TGI Fridays had $74 million of off-premises sales in 2016. That number climbed to $88 million, $121 million, and $138 million in respective years (the final being a figure through September 30, 2019).
Leading into the now-defunct deal with Allegro, the chain witnessed delivery sales increase more than 175 percent, year-over-year (from $16 million to $43 million).
While those trends were storming forward before COVID, a pivot has taken place. One of the things that happened as a result of the crisis, Bittorf says, is TGI Fridays reduced its reliance on discounting. "And I think that's a good thing," she says. "It's a really good thing for the entire industry because it can get to be too much of a drug."
Instead, TGI Fridays is trying to build a value proposition that sticks. Great value for the price, without the need to discount any flagship items.
COVID opened this opportunity to some extent because why consumers dine out has changed. It isn't so much a variety game anymore. Familiarity and trust have climbed the ladder.
Bittorf says many of TGI Fridays' metrics, like guest perception and overall brand attribute ratings, have risen steeply in recent weeks. Especially in the areas of cleanliness and safety.
"I think there's a little bit of youdon't know what you have until you lose it kind of thing," she says. "But, people are really missing Fridays."
Bittorf says the brand is outperforming many of its peers, per Black Box Intelligence ratings.
The chain sees that as a reflection of loyal customers, incentivizing its database, and also "just the fact that people trust us," Bittorf says.
It's given TGI Fridays a chance to leverage scale and equity in ways it couldn't when the field was oversaturated. Every restaurant has a "cleaning captain" that's responsible for sanitizing all touchpoints. They clean tables after every visit.
TGI Fridays also created disposable, one-time-use menus that are extra-large (and heavy) and double as a placemat. So customers can dine-in without actually touching the table, if they so choose.
Servers were instructed to ask guests if they can approach before doing so. They'll stand as far away as a consumer wants. But the key is they show care and thoughtfulness, and never assume anything. "We take our cues from our guests," Bittorf says.
TGI Fridays boasted contactless payment before COVID, which runs through its app. Guests scan a barcode on the check and pay without handing over their card. And the majority of units also feature portable credit card readers servers bring to the table where all somebody needs to do is stick the card in the slot. The employee touches the buttons.
Bittorf says TGI Fridays approached reopening deliberately. It hung back for about a week after regulations loosened to understand what the environment was going to look like.
She says they've tracked and polled consumers throughout the crisis to get a handle on the percentage of guests who wanted to return right away versus those who needed more off-premises options to hold them over. And also, what those returning are required to feel comfortable.
TGI Fridays was concerned, Bittorf admits, with reopening as a different TGI Fridays. Would the restaurant experience feel the same with new protocols? The company lowered the volume of music (so guests could hear the servers through masks). TGI Fridays restaurants currently are, understandably, less crowded and boisterous places than before.
"And so, we actually fielded some restaurants a couple of weeks ago, asking people who had been inside our restaurants, how did it feel? Did it feel foreign? Was it the same kind of thing?" Bittorf says. "And what we found overall is that people are willing to overlook some of the things in the restaurant, like servers wearing masks. … All of those things are all important, and they're willing trade-offs to get back inside the restaurant. And we were really happy to see that data. It was fascinating."
Essentially, TGI Fridays discovered a forgiving guest grateful to be back inside a restaurant. They were letting some past pain points go.
Pivoting to outdoor dining has been a major initiative of late. There are units where TGI Fridays literally pitched tents in the parking lot. Not small tents, but rented party tents that almost create a pop-up restaurant feel. "We’re still seeing people who really want to get out and eat at a restaurant. It’s just now changed from being inside the dining room to being outside in either a tent or on the patio,” she says.
TGI Fridays has north of 400 locations internationally. It’s experienced challenges with sales and traffic in recent years. In Q4 2019, traffic fell 5.9 percent at corporate stores, 11.4 percent at franchises, and 9.1 percent systemwide.
In terms of sales, Q4 comps dropped 9.4 percent at corporate stores, 12.8 percent at franchises, and 1.3 percent systemwide.
Some upward gains were tracking before COVID arrived, and the Allegro deal collapsed. Midway through Q1, traffic grew 2.3 percent at corporate stores, fell 4 percent at franchises, and dropped just 1.3 percent systemwide. As for same-store sales, corporate units slid only 1.9 percent, while franchises decreased 5.2 percent, and stores systemwide fell 3.7 percent. Revenue stood at $426 million, up from $293.1 million in 2018. Prior to the pandemic, revenue projected to increase to $557.6 million.
Blanchette, who joined the company in October 2018 after nine months as CEO of Ruby Tuesday, told Bloomberg, “Right now it’s all triage and it’s all about cash: How are you going to make it through and keep the company solvent?”
Blanchette previously served as president and COO of Carlson Restaurants Worldwide, then the parent company of TGI Fridays. He started his career with the casual chain, working a variety of roles for 18 years.
Blanchette’s other industry experience includes founding since-dissipated Ignite Restaurant Group as a holding company for casual-dining brands, bringing on Joe’s Crab Shack and Brickhouse Tavern + Tap. The company struggled to gain footing after acquiring Romano’s Macaroni Grill and filed for bankruptcy in 2017. Two years after buying the Italian chain for $55 million, it sold it for $8 million.
Blanchette also held the CEO title at fast casual Au Bon Pain for 20 months, a run that culminated with the chain’s sale to JAB Holding Company. He took the Ruby Tuesday job shortly after.
Bittorf says the company has zeroed in on its strengths during the pandemic. “When everything around you is changing at the same time, you really have to figure out what matters,” she says. “You can’t do everything at once. You’ve got to prioritize stuff. It’s been a really valuable experience for me, and I’ve been fortunate to be working with a great company.”