Chain Leader

Lane Cardwell

Casual Dining Does Not Medal
August 24, 2008

Casual dining can breathe a collective sigh of relief. The Olympics have ended, and customers can return to their normal lives for a while. Every four years the Summer Olympics take their toll on casual dining. The winter Olympics hurt also, but the summer Olympics draw a much bigger television audience. Especially these Olympics in Beijing. Unless you have a concept known for having a lot of televisions visible to most diners, like Buffalo Wild Wings and Champps, for most of casual dining the preliminary impact on sales was probably a 1%-2% loss versus the run rate prior to the Opening Ceremonies. Let me be the first to admit that the science behind trying to pinpoint this kind of impact over a two week period is very loose. 

However, couch potatoes make a poor side dish, and even worse customers.

The research analyst for the investment banking firm Morgan Keegan heard enough mention of the Olympic impact on casual dining sales from the companies that he follows to warrant putting out a short report on the issue. These Olympics are drawing a 15% larger television audience than the 2004 Olympics in Athens, averaging over 30 million prime time viewers per evening. In fact, one Saturday night, over 40 million viewers watched Michael Phelps win one of his many gold medals. That is a lot of eyes watching television, instead of sitting in a dining room on one of the two busiest nights of the week.

July was one of the worst months for comp sales for casual dining in the past 10 years. Distract customers for two weeks during August, and it has the potential for not being a great quarter (July-September) for casual dining. Knapp Track, a sales tracking service for casual dining restaurants, reports that the weekend of August 9&10 (the kickoff of the Olympics) had comps about 2% lower than the preceding three weekends. 

Sounds like the Olympic flu.

There are many variables that go into the sales impact on casual dining with events like these. First, not everyone cares enough about the Olympics to watch it for long periods on TV and disrupt their normal routines. Second, 28% of U.S. households have DVR capabilities with their televisions, giving them the ability to record an event and watch it on their own schedule. Third, take-out sales should have captured some of the lost dining room traffic. However, as any restaurant manager can tell you from standing in a half-full restaurant on a normally busy Saturday night, some events are powerful enough to keep people home and away from our restaurants. Weighing the neutral, the negative, and the positive factors nets a 2% loss in comp store sales.

Casual dining benefits from holidays like Valentine’s Day, Mother’s Day, and the run-up to the winter holidays. It is hurt by heavy rains, snow, and tropical storms. The American Idol finale is dreaded by managers nationwide since it keeps so many people home watching television. The Super Bowl is a one day event. The World Series can cover up to seven games spread over a nine day period. But the Olympics are unique in both their popularity, and their 17 day duration. Fortunately, they only roll around every other year (with Summer and Winter programs).

One day we can look forward to the introduction of the Curbside Delivery event to the Olympics. Until then casual dining will have to lick its wounds and move on down the road. After all, this industry is a marathon, not a sprint.

Posted by Lane Cardwell on August 24, 2008 | Comments (1)