Dive Brief:

• Casual dining chain Friendly's Restaurants is launching a new fast casual concept called Friendly’s Cafe, the company announced Tuesday. The first location opened in Westfield, Massachusetts on Feb. 26, and includes signature offerings from Friendly's menu served for both dine-in and off-premise guests.
• The 2,700-square-foot restaurant includes seating for 45 customers, as well as dedicated space for curbside pickup. Customers have the option to order online for pickup or delivery or at the counter or through a QR code at their table, where food is delivered once ready.
• Friendly's entry into a new restaurant category comes about a year and a half after parent company FIC Restaurants filed for Chapter 11 bankruptcy for the second time since 2011. CEO Craig Erlich, who took the helm of the company in January 2021, has led a revamp of Friendly's off-premise strategy and deployed a new loyalty program, new menu offerings and entry into both the fast casual and ghost kitchen spaces.

Dive Insight:

Friendly's addition of an off-premise focused, fast casual concept comes as the fast casual category recovers faster than the casual dining space. Total fast casual visits were up 8% for the year ending August 2021, roughly on par with pre-pandemic traffic, according to the NPD Group. By contrast, full-service restaurants's 2021remained 16% below traffic in 2019.

Many consumers are accessing fast casual concepts through off-premise channels. According to the NPD Group, off-premise orders in the segment grew by over 30% from 2020 to 2021, for instance, and off-premise traffic made up over 80% of fast casual traffic in the year ending August 2021.

Several full-service concepts have either added or ramped up their fast casual concepts throughout the past two years. Texas Roadhouse, for instance, first opened its Jaggers concepts in late 2015, but recently signed an expansion deal for 10 new locations in two new states to build on its three existing locations. IHOP recently opened it's Flip'd fast casual concept.

Cracker Barrel acquired breakfast-and-lunch fast casual chain Maple Street Biscuit in late 2019 and has since grown the concept to over 40 locations. A year ago, Hooters signed its first franchise deal for its fast casual concept, Hoots Wings, and operator AE REstaurant Group plans to open eight to 10 units annually starting this year. Aussie Grill, a fast casual concept by Outback Steakhouse, has several brick-and-mortar locations in Florida, as well as virtual locations in California, Nevada and Colorado.

Fast casual units require less real estate than a casual restaurant, and the cost savings possible here are attractive to casual chains looking to expand. An average Friendly’s restaurant, for instance, is about 3,200 square feet with seats for 120 to 130 guests — about 500 square feet larger than Friendly's Cafe.

Friendly's is also looking to add franchise developments in 15 states and lists a "drive-thru opportunity" as part of its basic criteria. With an omnichannel focus at its Friendly's Cafe, the company is could attract more potential operators thanks to its expanded off-premise capabilities.