Casual dining raises stakes at lunch

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A new round of lunchroom wars has been launched

While the recession tried to eat the lunch of casual-dining restaurants’ afternoon daypart, major chains fought back by retooling lunch promotions and offering guests time and menu flexibility.

A new round of lunchroom wars has been launched.

P.F. Chang’s China Bistro this week introduced its “more affordable” lunch program that offers more than 20 items in combos under $10, as well as a “pick two” Dim Sum Lunch at $7.45. Applebee’s also recently debuted a new “Pick ‘n’ Pair” lunch program that starts at $6.99 in most locations and offers 75 meal combinations.

These new offers follow Olive Garden’s $6.95 “Create Your Own” limited-time lunch, which debuted in March and runs through April 22; and Chili’s continuing $6-$7-$8 lunch combinations, introduced a year ago.

Watch Olive Garden’s commercial for its $6.95 lunch; story continues below

“Competition has gotten very heated during the lunch daypart, thanks to several factors,” Leslie Kerr, president and founder of the Boston-based consultancy Intellaprice said. “While the recession is one, there are others that are just as important. It’s not just guests’ wallets that are a factor here, but time and competition are also stirring the pot.”

P.F. Chang’s new lunch, which launched systemwide Monday, offers two levels of pricing and timing. The under $10 lunch combinations includes 21 entrées, ranging from almond-cashew chicken to pepper steak, and are served with soup or salad. But the $7.45 Dim Sum Lunch is a choice of soup or salad and a pick from among five steamed dumplings.

Watch a P.F. Chang’s commercial for its new lunch; story continues below

“Lunch diners are not just price-sensitive; they are also time-sensitive,” Kerr said in an email to Nation’s Restaurant News. “Most of them need to get in and get out in a short period of time and have many concepts from which to choose, including [quick serves] and fast casuals who can deliver quality and speed at the $7 and $8 price range.”

The combo is also good for the operator, she said. Operators can limit selections while seeming to offer choice because the guests can select from among their favorites.

“By keeping the message to a specific price point, restaurants can attract guests during a competitive time of day,” Kerr added. “While the ideal scenario would be to sell some steaks and a bottle of wine, that’s just not the lunch norm, at least in the casual-dining segment.”

Casual-dining executives have said that the new lunch combinations have boosted daypart sales. Raymond James securities analyst Bryan Elliott noted that P.F. Chang’s said the test of its lunch menu led to a 10-percent sales gain. Wyman T. Roberts, president of Brinker International’s Chili’s division, told analysts last spring that after Chili’s debuted its $6-$7-$8 lunch, it swung lunch traffic to the positive, and customers showed a surprising preference for the higher-end $8 items.