Full-Service Restaurants Falter Amid Slumping Sales

Casual dining spots are suffering from similar circumstances plaguing major retailers—slowing sales and shrinking foot traffic—as once-vibrant malls lose favor with Americans. At the same time, U.S. consumers are less satisfied with sit-down venues to the point where fast food now takes the lead in the American Customer Satisfaction Index (ACSI).

Just a year ago, full-service restaurants were rated among the top four industries tracked by the ACSI. Now the industry dives 3.7% to a score of 78 on ACSI’s 100-point scale, allowing fast food to slip past at 79—a first in ACSI history. For companies that depend on quality to justify higher prices, it is sobering news when lower-price competitors can deliver a more pleasing experience.

As menu prices rise, lower grocery costs may be encouraging more Americans to dine at home, and younger consumers seek quicker service, convenience, and healthier choices. Amid these changes, many sit-down chains are looking to redefine themselves, including off-premise options and menu upgrades.

The top restaurant continues to be Cracker Barrel, up 1% to 84—a score that makes the Americana-themed entrant a customer favorite. Second-place Texas Roadhouse beats other steakhouses with a score of 82, although Outback Steakhouse gains 4% to 80. Darden’s LongHorn Steakhouse tumbles 6% to fall below average at 77, tied with an improved Chili’s.

Another Darden chain, Olive Garden, holds stable at 81 and it continues to generate sales, aided by to-go order increases. Also hitting 81, Red Lobster rises 3% to a four-year high after investing in better ingredients to upgrade its menu.

For Applebee’s, introducing wood-fired grills has yet to pay off in improved satisfaction and the chain is unmoved at 79. Ruby Tuesday also stagnates at 78 and earlier this year put itself up for sale amid store closings. TGI Fridays falls 3% to 76, tying Denny’s (+3%).

In last place, Red Robin plummets 9% to 73 as its first-quarter same-store sales drop. Red Robin, like many establishments with a mall presence, is not immune to changes in consumer shopping habits. As such, the company is testing delivery and catering options, as well as rethinking its mall locations. For casual dining overall, it remains to be seen if efforts like these will be enough to turn around customer satisfaction and bolster sales in the long term.

Consumer Affairs: Survey Shows Consumers Prefer Fast Food to Full-Service Restaurants »

FSR Magazine: Report: Full-Service Restaurants are Losing to Fast Food »