7 defunct restaurant brands we can learn from
Regardless of your age, it is likely that you have fond memories of visiting a restaurant brand that is no longer in existence. That restaurant may no longer be around because they likely failed to adjust to changing consumer preferences and market dynamics. By learning from our past, we can avoid repeating the same mistakes, so let us take an educational look back and see what lessons we can apply today.
- Howard Johnson’s – this iconic brand once had more than 1,000 restaurants dotting the American motorways. They served diner classics including patty melts, milkshakes, chicken and biscuits, and “famous” fried clam strips. Their demise is attributed to over-reliance on auto-based travel as the jet age blossomed and a menu that was too diverse as consumers began to frequent restaurants that specialized in specific styles of cuisines.
- Burger Chef – once the leading burger brand in the United States, this chain had over 1,200 locations and many people credit them with the invention of the toy based “Kid’s Meal.” Corporate divestitures ultimately led to closures and selloffs until it ceased operations in 1982.
- Kenny Rogers Roasters – a 350 restaurant chain centered on rotisserie This brand was once so iconic that an entire episode of Seinfeld (“The Chicken Roaster”) was dedicated to it. A series of drawn out ownership changes led to the end of the brand in 2011.
- Steak and Ale – founded by the father of modern casual dining, Norman E. Brinker. This chain is credited with birthing an industry after many imitators and former disciples replicated the success of this once 280 location restaurant brand. Mergers, acquisitions, and bankruptcy finally took its toll on this brand when the doors opened for the last time in 2008.
- Farrell’s Ice Cream – a classic ice cream parlor, with staff dressed in 1900’s period dress and pianos in each restaurant, once numbered more than 20 outlets. Buyouts and years-long legal battles impacted the operation until it was featured on the CNBC series The Profit, where Marcus Lemonis made a deal with the current owners. The final outlet closed in June of 2019.
- Chi-Chi’s – credited with taking Mexican / Tex-Mex cuisine mainstream. This brand was so valuable that despite bankruptcies and food safety issues resulting in the closure of all restaurants in 2004, Hormel maintains licensing rights and sells salsa and other themed products in supermarkets to this day.
- Beefsteak Charlie’s – known for its emphasis on an all-you-can-eat salad bar, as well as unlimited beer, wine, or sangria. This famous brand and its sister concepts once numbered more than 60 locations. Such a part of the American culture, this restaurant chain has been referenced in episodes of Friends, Will & Grace, Entourage, and The Goldbergs. Once again, mergers, acquisitions and bankruptcy caused the closure of this brand in 2001.
In reminiscing or learning about these restaurant brands, what did you observe? The problem was not the food. Burgers are as popular as ever, rotisserie chicken is now served by supermarkets as an easy dinner option, and ice cream never goes out of style. Tex-Mex has been expanded to restaurants focusing on specific regional styles of Mexican cuisine, and unlimited beer and wine has made a comeback with restaurants offering bottomless drinks during brunch. It was the restaurants’ inability to drive guest experiences (top-line) and inability to increase operational efficiency (bottom-line) that caused instability and ultimately, financial insolvency.
To not only remain relevant for today, but to thrive in the future, restaurants must focus on the two core areas identified above; enhancing guest experiences (top-line) and increasing operational efficiency (bottom-line.) It is also important to be able to collect, organize, and process vast amounts of data, be able to analyze that data, and be able to adjust the business as needed. This can help a brand recognize and plan for trends – even before they are talked about by the rest of the industry (or industry blog posts like this one).
We are seeing restaurants of every size do amazing things to respond to trends. For instance, seeing a rise in delivery — iconic brand McDonalds added delivery, which is not easy to do when you are the largest restaurant in the world by sales. Spotting the growing expectations of their guests — Subway is using Amazon Personalize to deliver personalized recommendations for the endless varieties of ingredients and flavors.
Guest experiences (top-line)
Guests now expect experiences, recommendations, products, and services to be tailored specifically to their dietary restrictions, personal food preferences, and more. They also want a seamless, connected experience. That can be within the physical restaurant, or when the restaurant easily communicates relevant updates and information to them at the right time and in the right channel (web, mobile, gaming platform, voice, etc.) Additionally, they are most loyal to the restaurant brands that provide them with the highest levels of guest service.
Using AWS, restaurant brands accomplish this with machine learning (ML), artificial intelligence (AI), and core services to constantly evaluate guest data. AWS has the most comprehensive set of ML/AI services and core service ecosystem to deliver personalized experiences – even for restaurants with little to no prior experience. With AWS, restaurants can process their data, identify what is meaningful, experiment with algorithms, then optimize a customized personalization model. This allows restaurant brands to make relevant, personalized recommendations based on guests’ preferences and contextual information such as the current weather or time of the day, that deliver an enhanced and inspired guest experience. Domino’s saw success using Amazon Personalize to deliver relevant deals and offers through their digital channels.
Customer service is also important for restaurant brands. Instead of working with legacy providers or being constrained by company resources, businesses can leverage the same technology that handles customer service for Amazon.com. This enables restaurant brands to provide a modern guest services experience, with one view of the guest, which can anticipate needs and resolve issues efficiently. Amazon Connect, AWS’ cloud-based contact center service, makes it easy for any restaurant to deliver enhanced guest service at a lower cost. We’ve seen Subway have success with Amazon Connect which resulted in them dramatically increasing their CSAT score.
Increasing operational efficiency (bottom-line)
Efficiency is all about getting more out of what you already have. There is a need to optimize assets, improve utilization, implement predictive maintenance, and ensure quality, health, and safety standard compliance. Even modest improvements in efficiency can lead to transformative results.
AWS provides restaurant brands with everything required to quickly and easily manage data, while helping them understand their guests and operations. Restaurant brands are already leveraging AWS services to boost predictive capabilities; safely adjusting delivery routes, saving on energy and fuel costs, and maintaining their fleet and equipment. Restaurant brands are also expanding their use of data analytics and AI, to parse guest information for behavioral patterns to better plan inventory, schedules, and more. AWS offers the most comprehensive services, global scale, agility, and flexibility to combine different types of data and analytical approaches to gain deeper insights and drive more actionable outcomes.
From personal experience over the last 30 years, I have witnessed restaurant brands attempt to squeeze every ounce of usable life (and sometimes well beyond) out of their investments. This is actually more expensive over the long term and greatly hampers their ability to innovate and to adjust to changing guest demands. Often, retiring technical debt and migrating to the AWS Cloud is a crucial first step in a restaurant brand’s digital transformation. AWS has enabled many of the restaurant industry’s leading brands to eliminate their technical debt, manage massive amounts of data, comply with security requirements, and operate globally. One great example is Quiznos, who saw immediate cost savings by migrating to AWS and is expecting more on the way.
Restaurant brands are using the agility and salability of the AWS Cloud to save money, innovate, and reallocate resources to higher-value, revenue-generating projects faster. After all, their business is running great restaurants, driving exceptional guest experiences while increasing their operational efficiency to ensure they are not amended to the list of former well-known restaurant brands and that they do not become a footnote in history. There has never been a more exciting time to be in the restaurant business. And there has never been more access to data and technology to transform the business. I look forward to the future and all the innovation that it holds. Learn more on how AWS is transforming the travel and hospitality industry.