Dueling growth strategies

Seldom have two restaurant philosophies been pitted so blatantly against one another. Contestants, start your cash registers.

In one camp are the experienced multi-concept operators who’ve decided to narrow their holdings to category titans—Taco Bell and Pizza Hut, but not the A&W burger chain, to cite the most pronounced example.

In the other group are the mini-conglomerates that figure they can maximize sales and profit growth by amassing a stable of next-tier concepts—The Office Beer Bar & Grill, not Red Robin or Max & Erma’s. They’re shopping for deals on brands that may not be tearing up the fast lane, but in the aggregate can still get you there financially.

The current test of strategies is shaping up in fast food, with Arby’s joining A&W and Long John Silver’s on the public auction block. Presumably there are plenty of other, smaller chains similarly available for the right price.

The situation echoes what happened in casual dining during most trying days of the Great Recession, when giants like Outback and Brinker pared down their portfolios—and counter-thinkers like Landry’s went on a shopping spree.

At the very least, the dynamic has changed the line-ups of who owns what. Among the new stables of restaurant brands are companies like Villa Enterprises Management, which just added The Office to such concepts as South Philly Fries, Banana Smoothies, and perhaps its best-known brand, Villa Fresh Italian Kitchen, still known to fans as Villa Pizza.

You might not know Beautiful Brands International, but you may already compete with one of its 12 concepts, including what may be the industry’s only crepe chain since the dissolution of Magic Pan, Le Beau Rouleau. Its other brands include Camille’s Sidewalk Café, Fresh Berry, Rex’s Bite Size Chicken, In the Raw Sushi, Dixie Cream Donut, Blazing Onion Burger Co., Greenz Salads, Caz’s Chowhouse, Top That! Pizza and SmallCakes, a “cupcakery.”

Then there’s Focus Brands, with Moe’s Southwest Grill, Schlotzsky’s, Carvel, Cinnabon and Auntie Anne’s.
One of the oft-mentioned other multi-concept franchisors is Kahala, the parent of Blimpie, Ranch 1, Cereality and nine other concepts.

Lesser known are Trufoods, parent of Wall St. Deli, Arthur Treacher’s and Pudgie’s Chicken; and Franchise Brands, the younger venture of Subway founders Fred Deluca and Peter S. Buck, with Mama DeLuca’s Pizza and Taco Del Mar.

All those clusters are tiny dots compared to the collection that Landry’s has pulled together: Some 33 brands, ranging from the Mongolian-themed Yak & Yetti to its namesake high-end fishhouse.

Will that more-is-better philosophy prevail? Or will Wendy’s prove that a focus on a single powerhouse brand delivers more of a return to franchisees, shareholders and employees?

We’re about to find out.