That's Eatertainment!

Video games, skeeball, Harley simulators -- restaurants these days are adding bells and whistles galore to lure a wider array of diners

By Eric Wahlgren

Restaurateur Shannon Foust reckoned luring older folks looking for a quiet meal into the same restaurant as a beer-chugging sports crowd would be tough. But in America's cutthroat restaurant business, failing to attract a wide range of customers can be deadly. Foust's approach? Give them different hangouts in the same restaurant. At Damon's Grill, a bar separates a classic dining room from a rowdier "clubhouse" restaurant.

"The peanut butter and chocolate came together, and we had a Reese's cup," says Foust, chief executive of Damon International, based in Columbus, Ohio. The chain is counting on adding 10 to 12 outlets to its existing 117 this year as customers appear to have plenty of appetite for this two-eateries-in-one concept.

JAZZING IT UP.

  Damon's Grill is tame, of course, compared to dining destinations elsewhere, particularly in the nation's "eatertainment" capitol -- Las Vegas. Among the Vegas options: At Star Trek-themed Quark's Bar & Restaurant diners can munch on "hamborgers" and "final frontier" desserts while seated in a giant "star field." Too nerdy? The Crazy Armadillo Cantina nearby boasts bottle-juggling bartenders and "Shooter Girls" shimmying on tabletops.

Restaurants across the country are increasingly jazzing up the dining "experience," adding all types of entertainment and services to pump up customer volume. Food, of course, is still getting a lot of attention. At some chains menus seem to be getting as thick as glossy magazines because they keep adding items to contend with the growing list of finicky eaters out there: vegans, low-carb dieters, fat-free purists, and ethnic-food junkies, to tick off a few.

Eateries are also freshening up their decors, as many Americans find themselves spending more time in restaurants than around their own dining table at home. But a lot of the razzle-dazzle is coming in the form of eatertainment. "If you can't serve good food in the restaurant business, you're out," says Foust. "But it's those other things you do that can help you do well."

THE OTHER MOUSE HOUSE.

  Coloring books to keep the kids busy? Lame! Try Ghost Squad terrorist-fighting video games or Ferrari simulators -- just some of the extracurricular offerings at Dave & Busters (DAB ), a Dallas-based restaurant chain whose stock seems to be on a roll again after foundering two years ago.

Dishing up entertainment in addition to the main course is hardly an industry innovation. Theme-based outfits like Orlando-based music memorabilia chain Hard Rock Café, and kid-friendly Chuck E. Cheese's (CEC ), headquartered in Irving, Tex., have been melding restaurant and amusement park for decades. "But the level and frequency with which chains are doing this has risen," says Ron Paul, president of Technomic, a restaurant consulting firm in Chicago.

The reason? More people are dining out than ever before. Americans spent 33% more eating at restaurants -- about $2,211 per person on average in 2003 (the most recent government figures available) -- than they did a decade ago. That's partly because unlike in the past, the whole family often goes out.

EXTENDED-FAMILY DINING.

  Restaurants now have to appeal to not just mom and dad but also junior and granny, too. "As more people spend more food dollars outside the home, restaurants are trying to do as much as they can to grab those dollars," says Eric Wold, an analyst with Merriman Curhan Ford & Co. in Austin, Tex.

Damon's Grill is a perfect example. The clubhouse has been designed to be inviting to as big a mix of eaters as possible. At least one of the joint's four big-screen TVs is usually tuned to a sporting event. But often CNN and cartoons are showing on other screens too, Foust says. Thanks to individual tabletop speakers, diners get to pick what they watch.

And if that's not enough stimulation, the room is wired to let folks challenge other tables in interactive trivia. "There's no question that it's a point of differentiation," says Foust.By Eric Wahlgren

OVERRIDING THE VETO.

  It's tough to quantify what off-menu bells and whistles do for business. Financial performance at theme-based chains like Orlando-based Planet Hollywood, backed by celebrities including Bruce Willis and Arnold Schwarzenegger, and jungle-inspired Rainforest Café, now owned by Houston-based Landry's Restaurants (LNY ), has been up and down. But Foust, whose privately held chain logged $286 million in sales in 2004, maintains that the clubhouse-restaurant marriage has been crucial to growth.

For Dave & Busters, which derived nearly 46% of its $390 million fiscal 2004 sales from games and entertainment, the skeeball, Harley simulators, and other gizmos are key. "The food isn't bad," Wold says. "But it's really a giant bar with games and a restaurant surrounding it." Wold rates the stock a buy, citing what he thinks will be the chain's ability to tap into the U.S. economic rebound.

For many chains, casting a wider customer net starts with broadening the menu. Most look to avoid the dreaded "veto" vote -- industry-speak for the ability of one diner in a group to nix going to a restaurant because the food options aren't appealing. Damon's Grill, for instance, began in the 1970s as a rib joint, but it has morphed into a chain of full-service restaurants also serving salads, seafood, and grilled meats. Restaurants have had to tweak their menus, too, to satisfy diners seeking vegan, low-fat, low-carb, or other special fare.

DENNY'S DIVERSITY.

  Take Spartanburg (S.C.) Denny's (DEN ). The home of the decadent Grand Slam Breakfast now serves a meatless soy and cheese "Boca Burger" with a side of fruit. Want low-carb items? Denny's has that too, along with low-fat specials. Kids have their own menu, plus they eat free on Tuesdays and Saturdays. Seniors? They have a special menu, and lower prices to boot.

"Denny's is one of the best examples of reaching out to as varied a crowd as possible," says Wold, who rates the stock a buy on its turnaround prospects. Thanks in part to its menu overhaul, the ailing chain should turn a profit in 2005 for the first time in years, Wold forecasts.

Also part of the restaurant charm offensive: beefing up services. In particular, chains are making things more convenient for moms, who make anywhere from 75% to 90% of a family's decisions on food, says Dean Haskell, a director at JMP Securities in San Francisco.

SPEEDY SERVICE.

  What's new? Fast-food restaurants like McDonald's (MCD ) now take credit cards, unheard of a few years ago. And many casual-dining chains including the segment's largest, Overland Park (Kan.)-based Applebee's (APPB ), feature curbside delivery. Call in an order for a crispy orange chicken bowl, and an Applebee's employee will walk it out to your car.

Meantime, rival Red Robin (RRGB ) in Greenwood Village, Colo., has its own hook: It strives to limit order-to-serving time to eight minutes, a godsend for fidgety kids and the parents minding them, Haskell says. "For somebody who wants to eat at 7:30 p.m. and get the kids in bed at 8:30 p.m., it's a great place," Haskell says. He rates Red Robin market outperform and McDonald's market perform. He doesn't follow Applebee's.

The chains aren't the only ones trying to liven things up. Individually owned restaurants are feeling the heat, too. When restaurateur Russell Kassman bought a family-style Italian eatery in Napa, Calif., in 2004, he soon realized he would have to set himself apart to survive. The Depot's decor hadn't changed much since the restaurant opened in 1925. Moreover, the menu remained stacked with classic but heavy Italian pasta and meat dishes -- a turnoff to the health-conscious set. "You could roll a bowling ball through the place and not hit anyone," Kassman says of the occupancy.

FIGHTING FOR DINERS.

  Not anymore. On most nights, the restaurant is packed. That's because on weekend nights, Kassman brings in DJs who spin electronica as a youthful crowd orders from a revamped menu that now includes kids' plates and dishes like roasted red pepper vegan ravioli. To make sure boomers don't feel left out, the restaurant now has an oldies night. And live cabaret at Kassman's adjacent Rainbow Room bar draws a gay crowd, he says. Thanks to all the changes, business is up 75% over the same period last year, he says.

"The chains are getting better and better at competing for the same dollars we're competing for," says Kassman. "We have to create something that's unique and more customer-friendly than other restaurants." That's the mantra of a growing number of restaurant owners these days.

Tomorrow: A burger and fruit cup? Why sales of both health and fatty foods are rising

Wahlgren writes for BusinessWeek Online from San Francisco

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