Seafood restaurant growth lagging
While many U.S. casual seafood restaurant chains are performing well, their sales growth is falling below other segments, according to new data from foodservice consulting firm Technomic. While the restaurant industry as a whole grew an estimated 4 to 4.5 percent in 2012, casual seafood restaurant sales are not growing as quickly, based on quarterly same-store sales figures from large public chains through the third quarter of 2012.
“Seafood chains are having a harder time in the casual segment than most other chains,” Darren Tristano, executive vice president of Technomic, told SeafoodSource. “American consumers are still struggling to have the level of discretionary income for restaurants, especially for restaurants that are premium-priced. Seafood is priced at a higher rate because of the quality and freshness of the product,” he added.
For example, Red Lobster has realized negative earnings for three quarters in a row, including its most recent fiscal quarter with a 2.1 percent drop in sales.
The casual seafood sector has also suffered from diners who are switching from seafood chains to more steak-focused chains, according to Tristano. Fleming’s, Ruth’s Chris, and Texas Roadhouse all realized strong sales growth in 2012, and Technomic is projecting that sales in the steak category grew 5 percent in 2012. “These brands have done a better job of integrating seafood into the menu. They have continued to do well with steak, and they serve seafood as an option,” Tristano said.
At the same time, the casual seafood segment is still experiencing growth. Mitchell’s Fish Market’s sales grew around 3 percent in its most recent fiscal quarter, and Bonefish Grill’s most recent fiscal quarter sales grew 4 percent.
“Seafood is still very healthy, compared to other proteins and that will be a strong point of differentiation. Plus, the casual seafood chains have really gotten consumers to crave their grilled seafood products through their advertising,” Tristano said.
In addition, a new survey from Technomic found that a third of fast casual and casual dining consumers are ordering from the “healthy” menu more often than they did at year ago.
And, the casual restaurant segment continues to grow. Technomic found that 85 percent of casual dining consumers visit fast casual restaurants at least once month, and 82 percent frequent casual dining restaurants once a month. Conversely, only 40 percent of casual dining consumers visit upscale restaurants once a month.