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Takeout Takes Off

Takeout from Those in the Know

You're Only as Good as Your Packaging

Everyone knows french fries aren't going to travel well, including consumers, but they'll make it to their destination in a lot better shape than expected with the right packaging.

"You need to figure out how to have takeout be as good as dine-in," says Stephen Silverstein of Not Your Average Joe's. "This applies not only to the quality of the packaging, but the way it is packaged. For instance, a sauce that is served over a stuffed chicken breast may be shipped home individually, rather than on the chicken so that it doesn't absorb or evaporate. That's the challenge to the industry."

Convenience is Key

Whether providing carhop service, dedicated parking or a special pickup counter, takeout customers are looking for convenience. "You don't want to have to make them fight to get to the bar, to tell the bartender they have an order and then stand around, maybe with their kids in tow," warns Ron Paul of Technomic. "They feel in the way, and they don't know how long it's going to be before somebody gets their order out. You don't want it to look like takeout is an afterthought."

Know Your Capabilities

While some operators believe customers have lesser quality expectations from takeout than they do for dine-in, you must decide whether to offer whole or limited menus for takeout. The Cheesecake Factory's Howard Gordon says its customers are always amazed that its 200-item menu and 50-item dessert menu are available for takeout in its 75 units.

"(But) we always let people know not to leave things in their cars, and on and on and on," Gordon says. "We work hard all the time to see what the different packaging options are, and we've changed them numerous times. We're concerned about the integrity of the product."

Feedback is a Factor

Dine-in customers are more likely to tell you when their steak isn't done to their satisfaction or if they need more dressing. But once the customers have left the building, you may never hear from them again. "Periodically, calls are made to the home, just like a table visit,"

Silverstein explains. "If there is a problem with the takeout order, the manager is required to jump in the car and take them a replacement, just as a dine-in customer would be presented with a corrected meal. That's what builds loyalty."

A legion of takeout customers are hungry, and savvy restaurateurs carefully re-defining and refining their takeout programs to feed them and their own cash registers. Several big players are already in the game, including Outback Steakhouse, which is cleaning up with its "curbside takeaway" program; Ruby Tuesday's, which recently rolled out its Curbside TOGO service; and Bob Evans, which has gotten into the takeout game with its Carry Home Kitchen. And Applebee's is raking it in with its Carside To-Go service. The list of casual operations embracing takeout goes on and on.

It's a game of incremental profits, and if you haven't looked into offering a takeout service, then you may be short-changing your bottom line.

Ron Paul, president of Technomic, a Chicago-based marketing research and management-consulting firm, says two factors are driving the influx of casual dining takeout—consumer demand and operator need.

Hudson Riehle, senior vice president of the National Restaurant Association's Research and Information Services Division, concurs, saying that some of the biggest players are taking advantage of what he calls a "natural evolution".

"The primary force driving this influx of takeout is the need for higher-income households to quickly tap into the mainstream offerings of casual dining," Riehle explains. "Once operators recognized that the unfulfilled demand was there, it was a logical evolution of how consumers will use restaurants more and more in the future."

The emergence of fast-casual dining restaurants such as Panera, Chipotle and Baja Fresh sprang from a consumer willingness to pay more for a better quality of fast food. Many casual venues have also found that customers are willing to ante up for higher-quality food that they can carry away. Though casual dining takeout is relatively new to many markets, its healthy perception and variety are helping to drive the takeout market in time-starved America.

And considering how tough the economic climate has been in recent years, it comes as no surprise that operators are looking for any way they can to boost their bottom lines

Technomic's Paul says operators should be shooting for at least a 5% chunk of sales generated by takeout sales, but Riehle predicts takeout sales growth could reach 6 to 8% and, in some cases, even double digits.

"Operations vary, but takeout is a long-term growth area," Riehle says.

Applebee's, for example, recently reported that comparable company restaurant sales increased 8.4% for the four-week period ending January 25, 2004, which reflected an increase in guest traffic of approximately 7 to 7.5%. System-wide comparable sales were slightly higher, increasing 8.4% for the same period in 2003. The company first began its takeout sales push in the summer of 2002, when takeout accounted for just 4 percent of company sales. By the end of the fourth quarter of 2003, takeout sales accounted for 8% of company restaurant sales.

Tom Finocchiaro, executive director of "Operations Excellence" for Applebee's International, credits the company's infrastructure and training for the excellent execution of its Carside To Go service. "I believe we are among the best in speed of takeout service in the industry, but we can do better," he says. "In particular, we are focusing on improving our speed at peak times."

Finocchiaro says franchisees will continue to implement the Carside To Go service throughout 2004, and he expects the service to be a "significant driver of sales and traffic growth" as the company leverages its marketing muscle.

He doesn't regret jumping on the to-go bandwagon later than others and, in fact, says waiting allowed the company to learn from the mistakes of competitors. "We took the best of the best and made it better," Finocchiaro says.

But if imitation is the sincerest form of flattery, any serious discussion of takeout success stories would be remiss if it didn't include the often-imitated Outback Steakhouse, which pioneered curbside service. The Tampa-based company tops Technomic's list of full service restaurant chain takeout sales. Outback pulled in nearly $182 million in takeout sales for 2002, up from just under $121 million in 2000.

Recent invester postings report that comparable store sales for Outback Steakhouses over a four-week period ending February 21 are up 8% over the same period last year.

Creating a takeout program may not be easy, but the experts say it's a long-term growth area with big potential.

Clearly, the company is doing so well with its takeout business that company spokeswoman Stephanie Amberg said its officials no longer comment on Outback's takeout business.

"We used to (comment), and now everyone is imitating us," Amberg says. "We started this whole takeout (revolution)." Okay. While comparisons to Al Gore taking credit for creating the Internet are tempting, Outback's numbers do speak for themselves.

Similarly, Carrabba's, Outback's sister company, posted an increase of 6.5% comparable store sales for that period, with system-wide sales up 5.6% overall. It heavily promotes its Carside Carry-Out service on the radio and on its website.

While companies like Applebee's are inclined to learn from others' mistakes, and mavericks like Outback forged ahead while others hesitated, relative newcomers like Boston-based Not Your Average Joe's worked takeout into its game plan from day one.

"Takeout was always part of the initial plan, but it wasn't quite as intelligently designed as it is now," offers Stephen Silverstein, president and c.e.o. of Not Your Average Joe's. "Given the fact that 10 to 15% of our sales, depending on the unit, is pizza, we always knew that takeout was part of our total program."

From 1994 to 2004, the seven-unit company has seen takeout sales double. Not one quarter in the company's history has finished without a rise in takeout sales, which have grown at least twice the rate of tableside sales, and are now at about 15% of sales.

Silverstein hypothesizes that the demand for takeout is, in part, a result of the company's realization that the market could be tapped harder and that their business could be enhanced through perfected packaging, attention to detail, and modification of recipes specifically for takeout.

"If it takes you a half-hour to get home, the sauce on your pasta is going to be much different than if you were to eat it in-house," Silverstein says.

Some of Joe's recipes are tweaked for takeout so they will maintain consistency between dine-in and takeout meals. Microwaveable containers are also used for customers who don't plan to eat right away.

"We needed to deal with all those types of issues relating to takeout," explains Jaime Strobino, c.o.o. "We have a separate training program for takeout, and a whole separate program as an operational component."

Initially, Strobino admits, takeout at Joe's was not easily accessible. Customers would park, get out of their cars, fight their way to the bar, flag a server down and ask for their orders. The company's Carhop system was born out of a very personal need. "My wife and Jaime's wife were pregnant and already had small children," Silverstein explains. "It really became an issue to get in and out of the car and to get the kids out of their car seats."

Not Your Average Joe's Carhop system, which began about five-and-a-half years ago, was modeled after the old '50's carhops, minus the skates. Phone-in customers are asked for a vehicle description, and runners are on the lookout for the vehicles. Newer stores have separate entrances and exits for the runners, while older stores are fitted with cameras that show parking areas and allow servers to see customers pulling up for pickup.

But what once was innovative is now a requirement for profitable takeout, Silverstein muses. "It's no longer a nicety; it's a necessity," he says.

Maybe you don't have to offer takeout, but the numbers suggest you're foolish if you don't take a look. That's what the folks at Bob Evans discovered after implementing its "Carry Home Kitchen" system-wide three years ago. When it began the program then, it was pulling in takeout sales in the 3% percent range. Now those sales have grown to nearly 61/2%. That's nothing to sneeze at.

"We started with a limited menu and tried to educate customers on the items that would carry best, but with the following that we have, they didn't want any part of that," says Rinzy Nocero, senior v.p. of restaurant operations for Bob Evans' 550-plus stores. "They wanted the full menu, so we decided to make it all available for takeout.

The company took its time rolling out its takeout service, and didn't implement a curbside service until recently in test stores. So far, says Nocero, it looks promising and may expand chainwide in the future. "We're going to move cautiously and let our seven test stores continue throughout the summer. If it's the right thing, it will become glaring to us. We're very optimistic about it, though."

Takeout is all about ease. You must make it very easy for customers to pick-up an order.

Implementing takeout has been an educational process, Nocero says. "What we learned is that convenience is very important and that we had to make our packaging better. Customers needed packaging that was microwavable, and they did not want to fight crowds, so we put in separate entrances, separate registers and designated parking places."

While Bob Evans is cautiously rolling out its curbside takeout, Ruby Tuesday is rolling out its takeout program, which includes drive-up service, in all of its nearly 700 restaurants.

"The whole system is so easy to use," says Perrin Anderson, communications manager for Ruby Tuesday. "All customers do is call and drive up. We bring the food to them and they never leave the car."

The chain has a to-go server entrance and exit door, and the parking spaces are clearly marked "to-go parking only".

Ruby Tuesday's tested its takeout program for more than a year in 40-plus units. Its goal is to generate 9 to 10% of total sales through takeout. So far, its test units are seeing sales of about 7%.

"Our sales at company units were 4.5% the second quarter and we're projecting in excess of 5% for the third quarter, at an increase of about a half-percent per quarter, which would be at least a 2% same-store sales increase annually," says Anderson.

He points out that a third of the company'sunits are located in malls, which means its togo-sales will run a bit lower than other companies. To offset slower mall to-go sales, it offers delivery to workers in the mall.

Though many companies are seeing a major impact to their bottom lines, opportunities are out there for others to step up to the plate.

"A number (of companies) are still underdeveloped," Technomic's Paul says. "For example, Cheesecake Factory. I don't think they've got a good system yet. They have an opportunity to do more."

"I think we do 'to-go' very well," counters Howard Gordon, senior v.p. of business development for The Cheesecake Factory. "It's a challenge when you're busy. You're handling guests at the table as well as the counter, and we're able to do that successfully."

Cheesecake's takeout clientele, 99% of whom order over the phone, are required to pick up their orders at the restaurant's bakery counter. Orders are repeated to customers at the time they are placed to make sure any special details are correct.

"Our forte is being able to have our entire menu available," Gordon says. "We don't limit our customers. If we can do it for you sitting down, we can do it in takeout. That's our strength."

The company is so certain of its takeout capabilities that it's offered in its three Grand Luxe Cafes in Las Vegas, Los Angeles and Chicago, which, Gordon says, pushes the envelope to the upper echelon of casual dining. There, all 120 menu items and 20 in-house bakery desserts can be ordered for takeout, as well.

Technomic forecasts that takeout will become an ever-increasing share of business. "There are a lot of reasons not to drag the family out in a dark parking lot at 10 o'clock at night and try to find your car," Paul says. "And there are a lot of advantages to takeout."

Be it curb-side, car-side or counter-side, experts and insiders agree: Takeout is here to stay. How profitable it is for individual companies, however, will be determined by their ability to maintain the integrity of their product while delivering the convenience patrons demand.