Hot Spots: The Italian Job
Low-carb diets poses hurdle, but Italian category welcome chains and customers
By Scott Hume, Executive Managing Editor -- Restaurants & Institutions, 3/1/2004
|
The Italian-menu segment has been a steady and reliable producer and a key driver of the restaurant industry’s sales growth. The 18.5% compound annual growth rate the largest Italian casual-dining chains posted between 1981 and 2001, according to Chicago-based researcher Technomic Inc., is unrivaled.
The category gave no indications it couldn’t be counted on to keep its momentum in the 21st century. Indeed, between 2000 and 2002, Restaurants & Institutions’ Top 400 Restaurant Concepts charted a 16% increase in the Italian segment, which totaled $5.465 billion for 2002.
Suddenly, however, Italian menus anchored by pastas and bread look uncharacteristically vulnerable thanks to the surging popularity of low-carbohydrate diets. Is it possible “Dr. Atkins’ New Diet Revolution” will attain more lasting popularity than spaghetti and meat sauce? Not likely.
The performance of category leader Olive Garden suggests Americans’ love for all foods Italian is winning. Orlando, Fla.-based Darden Restaurants reported a 4.3% increase in same-store sales for 532-unit Olive Garden during its fiscal quarter ended Nov. 23, 2003. January 2004 sales were up 8% to 9%. Dallas-based Brinker International’s Romano’s Macaroni Grill and Tampa, Fla.-based Outback Steakhouse’s Carrabba’s Italian Grill also continue to post positive same-store sales numbers and to add units. Austin, Texas-based Fired Up’s 6-year-old Johnny Carino’s Country Italian concept recently opened its 100th location.
What’s Italian?
The category has lost neither its confidence in the
popularity of Italian foods nor its entrepreneurial
spirit. New
concepts take hold and plan for expansion. They
do not ignore low-carb
dieting’s impact, however. That simply is a consumer
preference—perhaps short-term, perhaps not—that
concepts address as they grow.
“‘Low-carb’ is a reality, and we’re looking for a high-quality low-carb pasta just as I expect everyone else is,” says Todd Hovenden, founder, president and CEO of the Bloomington, Ill.-based Biaggi’s Ristorante Italiano chain, which soon will open its 15th unit. “Atkins [diets] had an impact last year and will this year, but we also have locations showing double-digit sales gains.”
|
Biaggi’s growth strategy is to target markets smaller than those Olive Garden and Romano’s are eyeing, “and because of that we need to have broad appeal and be more than just Italian,” Hovenden says. Biaggi’s menus lasagna and fried calamari— “because you have to,” he says—but entrées also include Pork Chops al Forno, Salmon ai Ferri and Chicken alla Emillia, all without pasta components.
“Italian food has been popular for centuries. I don’t see any reason that will change,” says Adriano Paganini, the native of northern Italy who is founder and executive chef of the El Cerrito, Calif.-based Pasta Pomodoro chain. “When we started [in 1994], we were primarily a pasta restaurant, but the menu has evolved beyond pasta in the last several years. It is lighter, not because of carbs or calories, but because this is how Italians eat today.”
Pasta Pomodoro’s menu includes “Old World Pastas” such as Rigatoni Bolognese along with a “Contemporary Pastas” section. Here, primavera includes spinach, asparagus, broccoli, garlic, cremini mushrooms, eggplant, tomatoes and basil with the option of lower-carb whole-wheat pasta.
Votes of confidence
Wendy’s International showed its faith in the Italian
segment in 2002 when it acquired a 25% stake in Pasta Pomodoro.
In January of this year, giant real-estate developer DeBartolo
Property Group did the same, forging a joint venture with White
Plains, N.Y.-based Italian chain Famous Famiglia. The two parties
expect to open at least 25 units annually over the next five
years not only in shopping malls—where Tampa, Fla.-based
DeBartolo has a huge presence—but in sports
stadiums, airports and on college campuses.
Famous Famiglia already operates kiosks at Yankee Stadium (where Spartanburg, S.C.-based Centerplate is the concessions contractor), in several airports and on two campuses (Columbia University, New York City, and University of Pennsylvania in Philadelphia) and the venture’s parties see no bars to rapid expansion.
|
“DeBartolo brings capital and real-estate expertise to this partnership. Famous Famiglia brings a proven concept and high-quality products,” says Jerry DeNicholas, DeBartolo president and CEO. “Pizza is America’s favorite food. Italian food fits with any diet.”
Says Paul Kolaj, Famous Famiglia president and CEO: “We have pizza but also salads, heroes, calzones and pasta dishes, all with fresh ingredients. We’ve seen requests for less cheese, but diets haven’t hurt us. There’s always a place for freshness and quality at reasonable prices. We see enormous opportunity.”
Operating on five college campuses is Pandini’s, a proprietary brand of Gaithersburg, Md.-based Sodexho USA. Conceived as a quick-service pizza concept, Pandini’s rapidly is evolving into a broader-menu-though-still-Italian-themed restaurant concept akin to California Pizza Kitchen. In fact, Sodexho this year may take Pandini’s off campus; it’s negotiating with the New Jersey State Aquarium in Camden to open a unit there.
Jumpstarting the concept’s evolution has been adoption in larger locations of a high-volume, four-deck oven that can cook as many as 800 10-inch pizzas each hour. They also facilitate rapid baking of pasta dishes and breads.
“This allows us to be more creative, to stretch the menu. But more importantly, we, as contractors, need to develop a retail branding mentality if we’re going to compete with commercial [concepts] on campuses,” says Husein Kitabwalla, Sodexho vice president for brand development/retail brands. “Pandini’s offers a dining experience—it’s not just ‘student feeding’—and the perceived value we need to have if we’re going to keep students on campus rather than going to Wendy’s.”
|
Where space allows, Pandini’s can add a breakfast-daypart module. Smaller locations on campuses or in office locations may get a Pandini’s Express grab-and-go version as the concept expands.
High-end expectations
Columbus, Ohio-based Bravo! Development Inc.
(BDI) also is staying flexible in its
quest for a greater
share
of the Italian
market. Bravo! Cucina Italiana is a midscale
(average dinner check is $17), 20-unit
chain. For higher-income
areas—especially
high-end retail sites—BDI’s
Brio Tuscan Grille provides a more upscale
dining experience. The 11 Brio units
average $6.5 million in annual sales with
average checks of $15 at lunch and $24
at dinner.
“In Tuscany, you can get a great steak, and you can at Brio as well,” says Rick Doody, BDI chief executive officer. “It seems low-carb eating is here to stay, and we have to be sensitive to that. But Italian dining is more than pasta or pizza.”
At Brio it includes Gorgonzola-crusted strip steak (which any Atkins devotee could embrace) as well as whole oak-roasted chicken with lobster-butter sauce, and a daily grilled fresh-fish special.
“We’ve moved the Brio concept upscale, while some competitors have gone the other direction. Our biggest competition comes from high-end independents,” he says. “We’ve always promoted the idea that guests can order dishes prepared however they like, and our customers continue to respond to our level of service and food quality. Our challenge is to always exceed expectations.”
Three more to keep an eye on
Italian chains traditionally have been regionally clustered. There are many young-and-growing operations in the category across the country worth watching. Here are a few.
View All Blogs
