Cracker Barrel (CBRL) and Wingstop (WING) are Winning the Restaurant Rebound
September 1, 2022
Restaurant dining room restrictions are lifted, and Americans (thank goodness) are no longer limited to eating in their own dining rooms.
With the full menu of ways to chow down available again, where is everyone going?
Yep. The stampede back to restaurants is underway!
This is no doubt a much-welcomed development to a restaurant industry that was clinging to delivery and curbside pickup demand to stay alive. Yes, these alternatives remain popular with today’s convenience-minded consumers, but not nearly as popular as before.
LikeFolio trends show that the sit-down meal is back on!
And based on recent social media discussion, it may be just as much about the social experience as the food. The desire to have a good meal out with family and friends is bringing customers back to their favorite dining spot—and trying new ones.
Unfortunately, just as traffic started to improve, restaurants now face a new set of challenges. Ingredient, supply, and labor costs are way up. So too are staffing shortages. At the same time, inflation is putting a strain on discretionary spending. Dining out is often the first thing that families wipe from the budget.
Oh no, don’t leave us now! We promise the breadbasket never goes empty!
This has forced restaurants to re-strategize. Do we lean more on delivery and take out again? What promotions should we run to attract cash-strapped consumers?
There’s no clear recipe here. But some are figuring it out better than others.
Our outlier grid reveals that Cracker Barrel and Wingstop are devouring the competition!
Two very different brands, but with two common threads—value and innovation.
In the current fiscal quarter, comprehensive demand for Cracker Barrel’s old country flair is on pace to reach its highest post-Covid level yet!
Part of this chatter is driven by an innovative new menu item (Impossible plant-based sausage) to varying degrees of love and hate.
But we think the company’s main appeal is related to the company’s unique restaurant setup…and positioning alongside major highways.
While most restaurants are struggling to build off their pandemic recoveries, Cracker Barrel is still winning over consumers because:
It offers affordable homestyle food for breakfast, lunch, and dinner. The average check is still around $11 to $12.
Older consumers (presumably less impacted by inflation) love the food and the unique dining + shopping experience.
It is a pent-up travel demand beneficiary. Many restaurants are strategically located along major travel corridors. Travelers account for more than one-third of annual Cracker Barrel visits. Mentions of these visits specifically are up by more than +30% YoY.
Ok, but what about Wingstop? No chicken dumplings and seasonal collectibles for sale there.
More like tasty chicken wings and a tech-driven marketing machine.
On a 30-day average, Wingstop mentions are up +18% YoY. Hmm, how could a predominantly online business still be winning when consumers are back in dining rooms? We see a few things:
It is building off its pandemic digital success as well as anyone. The company continues to up its data analytics game to drive effective marketing campaigns. Higher check digital orders represented 60% of total sales last quarter—a major labor saving and competitive advantage.
The value proposition. Meal deals and bundles are resonating with consumers. 25 boneless wings in any 3 flavors I want for $16.99? Deal!
Menu innovation. When many restaurants are paring back menus, Wingstop is rolling out new flavors, bold chicken sandwich creations, and even chicken thigh bites.
Even as people return to restaurants, Wingstop is proving that you don’t need to have a fancy dining room and a balanced omnichannel model. In fact, it may not need a dining room at all.
Earlier this year, it launched the Wingstop “restaurant of the future”, a cash-less, seat-less hub in Dallas where digital ordering is the only option and ambiance…? well, there is none.
In the rapidly evolving restaurant business, there’s no one way to win. Yet as Cracker Barrel and Wingstop are showing, 1) it pays to be different and 2) you can’t lose when you satisfy value-conscious appetites.