Total sales are up 30% year-over-year as steakhouses feel pent-up demand from consumers across the country.
With the pandemic and inflationary pressures waning, pessimism seems to be the natural response for buffet operators, but if you ask Gregg Nettleton, president of Ponderosa and Bonanza Steakhouses, you’ll hear a different tune.
He thinks buffet restaurants will persist because of their ability to offer differentiated convenience and value, and recent numbers support his theory. Total sales were up 30% year-to-date compared to 2021 and 40% in the second quarter compared to the same period last year. Families in particular have returned very frequently, Nettleton says. He estimates that some travel between 30 and 60 minutes for an evening.
“We are seeing record sales in some of our units, we are seeing families coming back into the mix. There is a resurgence and things are looking very positive,” Nettleton says. … We were locked down and couldn’t go anywhere, and I think people were just excited to go out and socialize. Families come back very frequently, and I think that’s because everyone is welcome here. It’s comfort food, it’s value-based, and it’s the same kind of food you grew up eating at your grandparents’ house.
Ponderosa and Bonanza are owned by FAT Brands, which bought the steakhouses for $10.5 million in late 2017. At the time, it was the company’s first acquisition since Buffalo’s Cafe in 2011.
In the early weeks of COVID, when questions were swirling about how buffet chains would survive, Nettleton ensured leadership was connected to every franchisee within the first seven to 10 days. The team provided advice and continuously updated them on the best ways to operate and protect customers and themselves, such as offering disposable gloves and changing serving utensils every 20-30 minutes.
Steakhouses temporarily morphed into a full-service model in which servers brought food in from the kitchen. The decision increased labor costs, but Nettleton says it was a worthwhile price. Fast forward to summer 2022, there are still a few stores operating this method, but a majority have returned to the buffet. Nettleton anticipates that all units will return to normalized operations in the near future.
“It’s what our customers prefer,” he says. “He’s a better role model for us. This makes work easier and allows our employees to focus on the quality of the food instead of worrying about running to and from the tables.
The new question presented before Ponderosa and Bonanza is historical inflation. To combat rising costs, especially of protein, restaurants have raised menu prices, but only slightly, says Nettleton, who believes value should remain a core value.
“We didn’t take the price to cover all the inflation around food because we don’t think it’s a good move for us strategically,” he says. “We want to drive traffic, which means you don’t want to put barriers in front of customers. They will include some increase, but nothing too high.
Due to supply chain volatility, the availability of menu items has fluctuated and steakhouses have had to get creative in response. For example, the lack of certain ingredients prevented restaurants from offering their traditional chicken wings. So the brands improvised and created a new flavor profile that resembles the original.
While some customers miss the old version, the substitute still satisfies the customers.
“We have to be aware of new recipes,” he says. “We are constantly reinventing products. People will tell me they miss the old fenders, but they love the new ones, which is really important to us.
Recent success allows Nettleton to look to the future after being so focused on the present for the past few years. Discussions with franchisees regarding expansion have resumed and several units are being renovated. According to the company’s website, ideal locations are between 2,000 and 5,000 square feet, depending on climate, space, layout, clientele and economy. Additionally, food court or booth locations can be as small as 800 to 1,000 square feet. Ponderosa and Bonanza target the Midwest and Southeast states domestically and a handful of international markets, Egypt, Qatar, Taiwan and the United Arab Emirates.
Although the pandemic is still ongoing, Nettleton says it’s important to strike now.
“You can’t wait for it to be [the pandemic] before we start,” he says. “It’s going to take too long to run. We are excited to know where we can go forward… We are well positioned for the future. There is more interest, we have returning customers. We are even more optimistic now than before.
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