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You'll Never Guess Which Casual Dining Restaurant Is Everyone's Favorite

It's no secret that when diners go out to eat these days they prefer the fresh ingredients, customizable menus, pleasing restaurant environs, and reasonable prices that fast-casual chains are providing. They're the one segment of the restaurant industry that's provided consistent growth since the recession.

It's "salad days" for fast-casual chains like Chipotle, but a few casual-dining eateries are enjoying a smorgasbord of customers, too.

And their popularity hasn't abated. U.S. Census Bureau data shows sales in U.S. food and drinking establishments are up 4.6% over the first seven months of 2014 compared to last year, and fast-casual chains like Chipotle Mexican Grill are responsible for a good portion of the growth. Chipotle, for example, saw revenues surge 26% last quarter as comparable restaurant sales -- driven by large gains in traffic -- jumped 15.5% year over year.

Casual-dining restaurants, however, continue to suffer from declining customer counts. The market researchers at NPD Group found the mid-level, full-service dining market encompassing both midscale eateries -- which typically have a breakfast daypart menu (think IHOP or Denny's) -- and casual-dining restaurants -- more commonly serving only lunch and dinner -- is still on the wane, with the segments losing 4% and 3% of their customers from the year-ago period, respectively.. 

Data: U.S. Census Bureau.

It's an industrywide phenomenon, really, as lower traffic has led to lackluster performance everywhere. The folks at Black Box Intelligence & People Report note that the industry hasn't posted a single quarter of same-store traffic growth since the recession. Obviously, as Chipotle's numbers above suggest, that doesn't apply to everyone.

Setting the table
Even within the casual-dining segment there are pockets of light. The restaurants as a whole might be hemorrhaging sales and customers, but there are individual chains that are actually doing quite well. Here's a challenge: Try to guess which casual-dining restaurant is actually still growing and wins rave reviews from customers across North America.

There's a broad selection of restaurants to choose from, to be sure, so I'll give some hints.

One of the primary reasons customers have turned to Chipotle, Panera Bread, or Zoe's Kitchen is the perceived quality of their food ingredients, their freshness, and how that translates into healthfulness. It's no different, really, when it comes to casual-dining chains, and this top chain got far and away top marks when it comes to its food quality.

Similarly, it was at the top of the list again when it came to its food being perceived as healthy and offered in pleasant surroundings. Considering those are some of the key hallmarks of the fast-casual segment, there may be something to this restaurant ranking so high with customers. It exhibits some of the best qualities of the fastest-growing restaurant niche, even if the experience itself is very different.

With these factors in mind, go ahead, take your best guess...

The customer's favorite casual-dining restaurant
If you said Cracker Barrel, Red Robin Gourmet Burgers, Ruby Tuesday, or Buffalo Wild Wings, good job! You've chosen Nos. 2 through 5 of the largest restaurant chains offering a general menu -- these four got high overall scores from patrons.

However, if you said Cheesecake Factory (NASDAQ: CAKE  ) , go ahead and take a bow.

Customers keep coming back to Cheesecake Factory for more than just cake. Source: Cheesecake Factory.

In an April 2014 survey of 6,100 consumers by Market Force Information, Cheesecake Factory was ranked No. 1 for food quality, food healthiness, and atmosphere, gaining a composite consumer loyalty score of 61%, putting it far enough ahead of second-place Cracker Barrel with 58%.

According to Cheesecake Factory's latest quarterly report, revenues jumped almost 29% from last year as comparable restaurant sales increased more than 17%, one of its strongest performances ever and its 18th consecutive quarter of positive comps growth. That certainly bucks the trend of the rest of the dining category!

Part of what helps the chain outperform its rivals is the fact that it has 170 restaurants spread out across the U.S., many in regions less affected by the headwinds that have assaulted the rest of the industry, such as last winter's harsh weather. The weather still played a role in those restaurants located in the Northeast and Midwest, such as those located in Chicago, but the company still hasn't had to resort to promotions or discounting to get patrons to come in. It continues to gain market share despite the environment remaining constrained for consumers and restaurants.

Data: Market Force Information.

Where Cheesecake Factory excelled was in food quality, besting both Cracker Barrel and Red Robin, as well as tying with Applebee's and Ruby Tuesday on healthy menu offerings, and tying again with Cracker Barrel on atmosphere.

Interestingly, though, it didn't even rank in the top five in terms of being kid-friendly, having fast or friendly service, or in being a good value. Cracker Barrel, on the other hand, ranked high in all seven categories, making it a worthy runner-up.

Now that's rich
Not that everything is running as smooth as custard. Cheesecake Factory's high-end chain, Grand Lux Cafe, saw its comps fall 2.7% last quarter. In fact, the chain has only had a couple of quarters in which same-restaurant sales were in positive territory. Of course, with only 11 Grand Lux restaurants, it's not a particular problem, but it may eventually make for an asset that will be put up for sale.

With the restaurant industry as a whole facing a tough economic environment, and casual-dining in particular being buffeted, the ability of Cheesecake Factory to continue to forge ahead makes it one dining experience that investors just might want to pull up a seat at. 

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Read/Post Comments (28) | Recommend This Article (49)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 17, 2014, at 2:43 PM, Taz wrote:

    Cheesecake Factory? What a laugh! Not only is their food way over the top calorie-wise but their two stores in my area are among the loudest with very poor service. And overpriced to boot. I will never go back.

  • Report this Comment On August 17, 2014, at 3:17 PM, Lindel wrote:

    I just don't get the hype about Chipotle. It's good, but I'm not bonkers over it. You can get better food at a real Mexican restaurant for about the same price. But I see the disclaimer about Motley Fool owning shares in the restaurant, making things clearer.

  • Report this Comment On August 17, 2014, at 3:21 PM, elsiebells wrote:

    Ruby Tuesday doesn't seem to bethat great here..

    Cracker Barrel is almost always good unless they're super busy and get tablespoon full of mashed potatoes etc.. Panera Bread is okay but overpriced.

  • Report this Comment On August 17, 2014, at 3:35 PM, rough1 wrote:

    Panera Bread needs to increase meat servings. The lack of meat in a sandwich, especially the steak/roast beef variety is a travesty. The ham sandwiches are really the best value at Panera Bread. It is only a good value when quality is matched with quantity.

  • Report this Comment On August 17, 2014, at 3:37 PM, WalkingMan wrote:

    My restaurant is the best. Dollar shots of Wild Turkey 101 after 7 PM. No DUI's since I am home already. $1.50 1/3 pound grass fed beef burgers just off the grill. Homemade buns for about 10 cents. Baby Back Ribs for about $1.75 per serving (all I can eat for $3).

    Free music per my piano, key board, guitars.

    And so on.

  • Report this Comment On August 17, 2014, at 3:45 PM, SWFLORIDA1106 wrote:

    Cracker Barrel? That's a joke of a restaurant...

  • Report this Comment On August 17, 2014, at 3:47 PM, marblatx wrote:

    Cheddar's is my favorite and not even mentioned.

  • Report this Comment On August 17, 2014, at 5:16 PM, dpenn1 wrote:

    Cheesecake factory? Seriously? Home of several of the WORST dishes in terms of calories and fat. The cafeteria like atmosphere? The outrageous prices for alcohol($6 for a domestic draft? Really?) I will never set foot in a cheesecake factory again.

  • Report this Comment On August 17, 2014, at 5:53 PM, southernshark wrote:

    What, no mention of Cha Chas, Mexican grill.

    Probably because it's not a lame chain with bad food.

    None of the restaurants on this list are good.

    Chipotle =small portions and overpriced.

    Panera = same as Chipotle but also incredibly slooooow.

    the only chain I like is Pollo Tropical.

  • Report this Comment On August 17, 2014, at 6:43 PM, thedude1500 wrote:

    I think this segment is still deeply affected by the economy. If you perceived as catering to more upscale customers, business is booming. If you are perceived as catering to middle class or working class customers, you are losing ground and badly.

  • Report this Comment On August 17, 2014, at 7:02 PM, shelby550 wrote:

    Would not buy any restaurant stock Too many problems coming----(1) Obamacare (2) rising labor costs due to menu prices.(2) large potential increase in minimum wage(3) rising food costs. Not as many customers are going to be able to afford the rising menu prices. I can tell you from experience that customer count is a function of price---Just as sure as water runs down hill.

  • Report this Comment On August 17, 2014, at 7:08 PM, segarolow4 wrote:

    I go to IN And out.. Forget the rest!


  • Report this Comment On August 17, 2014, at 7:55 PM, BUbulldog wrote:

    People people people...when are we going to learn Cheesecake Factory is NOT any more unhealthy than the next chain restaurant. Are the dishes 1,700-2,200 calories per? Yes. Are they also about 50% larger than the next chain restaurant? Yes.

    It's a fact that anyone who goes to CAKE eats half and takes the leftovers home. Divide your calories in half and you've got yore average TGIF Fridays entree.

  • Report this Comment On August 17, 2014, at 7:55 PM, BUbulldog wrote:


  • Report this Comment On August 17, 2014, at 8:17 PM, SIPP wrote:

    Where did you do your research? SoCal or Atlanta?

    The Cheesecake Factory is nothing but an overpriced calorie warehouse.

    Chipotle is completely overpriced for what you get. And it's really not that good.

    I think the author needs to get out a bit more and stop trying to be so "politically correct"....

  • Report this Comment On August 17, 2014, at 8:18 PM, Tommylee2 wrote:

    I've never even seen a Cheesecake Factory around here but I was just told there is one about fifty miles away. I doubt if it is good enough for me to want to drive that far. Cracker Barrel, now that is the place for me and I have driven over 100 miles to eat at one. Yes, the first one n Georgia was way up in Dalton, near the Tennessee line and we'd drive up there now and then on a Saturday morning for the food and the atmosphere. Our kids loved it and we enjoyed seeing the candies and drinks and toys and things that we remembered from when we were young. I still enjoy a Cracker Barrel meal whenever I can and now we have one fairly close to us and I know it well. "Uncle Hershel's breakfast with black coffee, please."

  • Report this Comment On August 17, 2014, at 8:41 PM, toomuchgas wrote:

    I always try to go to local restaurants. I'd rather eat Italian than Mexican. Never been to Chipotle or Cracker Barrel cause there isn't one near. When traveling I like The Capital Grill for chain restaurants.

  • Report this Comment On August 17, 2014, at 9:32 PM, Vitabrits wrote:

    Cheesecake Factory is like California Pizza Kitchen: caloric, overpriced and rude.

  • Report this Comment On August 17, 2014, at 9:47 PM, Carlee wrote:

    cracker barrel sucks! Tasteless food, small portions, and in the Anderson Indiana location they need an exhaust system. The air is so thick with grease and smoke you can barely breathe. Not good servers either. Guess it could just be that location.

  • Report this Comment On August 17, 2014, at 10:03 PM, Ken65 wrote:

    These are at the top of the list only because they are the New kids on the Block, so to speak.

    Where will they be, 10, 20, or 30 years from now?

    Many of them will fall by the way side as they become the old and boring eateries.

    And then, now unheard of chains, will be the hot ones.

    So get them while there hot!

    I do agree with many posters here, that these are not the best for food, service or cost, but then again, the latest and newest will always be tried by the public.

    If for no other reasons then the advertising hype. Same as any new product.

  • Report this Comment On August 17, 2014, at 11:36 PM, Lore wrote:

    Yup, Cheesecake Factory-- the food is awesome, reaonably priced with fresh ingredients, well-prepared, waitstaff are always friendly, and the big secret-- BUbulldog had it right -- finish half your meal, box the remainder, and take it home for later.

    Smaller secret-- the outrageous cheesecake display -- look, but don't touch. Dessert Porn on display to taunt your diet. Put your executive function in control, enjoy the meal, pass on dessert.

    Eventually management will add "slivers" to the dessert menu, for the weaker of us. And they won't cost as much per slice-- say a buck each. Yum!

  • Report this Comment On August 18, 2014, at 1:11 AM, havingmysayinme wrote:

    I've been to Cracker Barrel once. The food was all previously frozen and the biscuits/corn muffins were made from mixes. They advertise made from scratch, but I didn't see anything made from scratch. The service was lousy, slow, and they got 3 out of 5 orders wrong.

  • Report this Comment On August 18, 2014, at 9:30 AM, danbhart wrote:

    I think the reason Chipotle is so popular is merely a question of who uses the internet most, in much the same way that you read a lot more left wing political opinion online than you encounter in the streets. The young can afford Chipotle much like the young are brainwashed by their loser/leftist professors. Unlike the twisted politics, however, Chipotle IS good so far as it goes and that is a good, cheap, filling lunch. If their left wing loser president would generate jobs, they might be able to afford Carabba's, a really NICE chain restaurant. That will come later. HAHAHA.

  • Report this Comment On August 18, 2014, at 9:30 AM, gl2238 wrote:

    Worst food establishment I have ever been in. In two visits I experienced extremely poor service, insufficiently cooked food, over cooked food, wrong amount of spice and flavorings and high caloric deserts that would represent at least two maybe three nails in a coffin.

  • Report this Comment On August 18, 2014, at 12:32 PM, snaginc wrote:

    You could not pay me to eat at Cheesecake Factory again. Ditto for Crackerbarrell. Red Robin is far too noisy. Like Applebee's and Ruby Tuesday. Chili's sends me running for the bathroom by the time I get home. Have never been to TGI Friday's or Buffalo Wild Wings. Do love a good Chipotle, however.

  • Report this Comment On August 18, 2014, at 2:06 PM, Zuzu72 wrote:

    What? No Zaxby's or Subway? These are pretty quiet AND have healthy choices on the menu.

  • Report this Comment On August 18, 2014, at 3:34 PM, birdlady1 wrote:

    I don't eat at any of these places. Sub-par food at all of them.

  • Report this Comment On September 12, 2014, at 8:55 PM, drex88 wrote:

    CBRL if you are in area holds a pretty good shareholders meeting. I've been to a couple and plan on more. Had the stock for over 20 years and buying more.

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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