Late lunch emerges as a lucrative, new daypart
by Milford Prewitt
Reprinted with the permission of Nation's Restaurant News
The hours between 2 p.m. and 5 p.m. are becoming a thriving daypart for restaurant operators nationwide as they discover the cash-rich potential of serving late lunch.
Given lifestyle changes that have people working longer and nontraditional hours, and with technological advances allowing workers to carry their offices with them, many operators are finding a hungry clientele to fill their seats during the hours when many eateries used to close to prepare for the evening rush.
From the 75-unit regional chain Salad Works based in the Philadelphia suburb of Conshohocken, Pa., to the upscale pan-Latin restaurant Chispa in Coral Gables, Fla., to midtown Manhattan and sister concepts Brooklyn Diner USA and Red Eye Grill, to the six-unit Artuzzi's Italian Kitchen chain in Atlanta, operators in every segment are beaming about the double-digit sales percentages that many are seeing between 2 p.m. and 5 p.m.
For at least one operator - the 13-unit Max's restaurant chain in San Francisco - sales increases registered during the late afternoon had gone undetected until the company ran a report on transactions by time of day following a reporter's request.
With one unit in Chicago and the rest operating in the San Francisco Bay Area, Max's officials discovered that 11 stores are reporting sales gains between 22 percent and 29 percent during the 2 p.m. to 4 p.m. time frame, said Billy Berkowitz, director of operations.
Max's, whose marketing tagline reads, "Everything you've always wanted to eat," is an elegant but casual restaurant concept with midrange price points and a store prototype that seats 200. Average lunchtime checks are about $13.
"[The late-lunch sales were] somewhat of a surprise," Berkowitz said. "If some of our stores are averaging 1,700 transactions over a week, about 500 were between 2 and 4.
"If you are doing that kind of business, you certainly don't want to close," Berkowitz added, referring to the full-service segment's widespread practice of closing after lunch and reopening by dinner in order to prepare for evening business, assess inventory and hold staff meetings to discuss specials and other issues.
Seismic changes in the lifestyles and work habits of consumers - not the least of which is that people are working more hours and commuting longer than previous generations - have forced some operators to rethink what used to be an underutilized daypart, said Rick Van Warner, president of the Parquet Group, an Orlando, Fla.-based restaurant consulting firm.
Beyond lifestyle changes of those in the workforce, Van Warner added that advances in computers and telecommunications mean office workers can take their desks, file cabinets and phones with them in hardware packages that get tinier and thinner with each passing year. In response, more and more restaurants are investing in and promoting Wi-Fi accessibility to a degree that rivals the installation of lighting, tables and seats.
"Unfortunately, all of this means that people are working harder and longer," Van Warner added. "This idea of working 9 to 5 is way out the window, and if you are one of the fortunate few who has survived a white-collar corporate layoff, chances are you are probably doing the work of two to three people.
"So the whole notion of when to eat lunch and lunchtime has just changed, and this is what smart operators are picking up on with late lunch." Based on late-afternoon sales figures, Berkowitz of Max's said that installing Wi-Fi connectivity in his chain's units would be a tempting option to lure late-afternoon diners.
"We are already seeing a lot of people using their laptops and everything else," he said. "We are not Wi-Fi-friendly yet, but I'm a bit wary about people coming in here making an office out of our dining room."
Richard Green, director of operations for the Union Square Hospitality Group in Manhattan - parent company of five fine-dining restaurants, including Union Square Café - said operators enjoying a surge in late-afternoon sales owe their good fortune to Starbucks.
"For some time now, our guests have been telling us, the industry that is, that [they] need [us] throughout the day, not just from 11 to 2, or 5 to closing," Green said. "Starbucks listened and saw an opportunity, and now you go into a Starbucks and you see that they have allowed these communities to develop inside of their stores.
"Just look at their furniture, plush sofas, Wi-Fi connectivity, and, to their benefit, they showed people that coffee is not just for breakfast and espresso and cappuccino are not just after-dinner beverages. You can drink lattes and espresso all day long," he said.
"I think the whole industry is following their lead. Late afternoon is no longer a time for operators to catch their breath or take a break before dinner."
Rob Caswick, co-founder and partner of Artuzzi's Italian Kitchen, a six-unit, fast-casual Italian concept based in Atlanta, said the 2 p.m. to 4 p.m. time frame contributes 25 percent of lunch sales at his chain. Meanwhile, lunch makes up 75 percent of daily average-unit volume, he reported.
He said customers who dine between 2 p.m. and 5 p.m. are usually solo males - both white-collar corporate types and home-office entrepreneurs - who seem to enjoy the ease and quiet of a later lunch where they can have a quality meal at a good price and get some work done at the same time.
Caswick, who considers himself a late-afternoon diner, said in handling negotiations for four new units and fielding franchising inquiries, he is not much different from the guests he serves.
"We are not necessarily seeing the classic businessman lunch diner," he said. "What we do see are a lot of men, in suits or casual, coming in the late afternoon with their BlackBerry [handheld computer units] and laptops and trying to get a little work done."
Chispa, a pan-Latin concept in Coral Gables, Fla., has developed a late-lunch period for a specific market - the auto mechanics and salesmen who work nearby at a luxury-car dealership called The Collection. To serve that clientele, chef Adam Votaw has crafted a special late-afternoon menu called The Collection Quickie, comprised of classic Latin dishes that can be served quickly but are savory and eclectic. The menu has become a big hit with local elected officials, celebrities and affluent shoppers as well.
Chispa's check average at lunch is about $25, Votaw said.
Paul Steck, senior vice president and chief operating officer of the 75-unit Saladworks chain offering made-to-order salads, said late-afternoon sales for the past four months are up 18 percent between 2 p.m. and 5 p.m., compared with year-ago levels.
Steck noted that lifestyle changes, consumer concerns about eating more healthfully, and a sizable number of area housewives who work out and dine later are all benefiting his business.
He said that although Saladworks has a small marketing budget, the company relies on the physical design of the units, which are equipped with larger tabletops and Wi-Fi connectivity, to appeal to late-lunch diners who tend to need to spread out their laptops and other work supplies.
"We are not spending any marketing dollars to chase this daypart, but I can tell you that we are continually tweaking our units from the music [smooth jazz], to the lighting, to the Wi-Fi connection to say, 'Use us,'" he said. "You can move our tables around, pull them together, have a business meeting. All of this is driving sales in this daypart."
At El Pollo Loco, the 350-unit grilled-chicken chain based in Irvine, Calif., late lunch - or as the company refers to it, the "snack daypart" - has seen an 11-percent increase in traffic in the past year, reports Mark Hardison, director of marketing.
In Philadelphia's Old Town tourist district, Ellen Yin, owner of Fork, says many of her late-afternoon guests are tourists visiting nearby attractions, such as the Liberty Bell or Constitution Hall, or shopping.
But she wonders if all the emphasis on late lunch is a new name for an old phenomenon.
"This is our ninth year in business, and almost from the start, we had what we called our midday menu," she said, conceding that without a location in a tourist area, late-afternoon dining could be a challenge for Fork. mprewitt@nrn.com
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