Rediscovering Family Restaurants... Will They Leap into a Second Golden Age?

Outback Steakhouse's Black Label Spring Lamb Steak. Photo by Outback Steakhouse

[Asia Economy Reporter Moon Hyewon] Survivors of the so-called ‘first-generation family restaurants’ such as Outback Steakhouse and TGIF (TGI Fridays) are seeking new owners.

According to the investment banking (IB) industry on the 2nd, Lotte GRS, which operates TGIF, plans to transfer 15 domestic stores to MFG Korea as of the 30th of this month. Outback Steakhouse, owned by the domestic private equity firm Skylake Equity Partners, is currently undergoing a sales process. A preferred negotiation partner is expected to be selected as early as next week. Chicken franchise company bhc has expressed strong intent to acquire, making it the most likely candidate.

From the late 1990s to the early and mid-2000s, domestic family restaurants were dominated by TGIF, Bennigan’s, Pizza Hut, Mr. Pizza, and Outback, enjoying their heyday. Western food culture became highly popular, and the market size expanded from 80 billion KRW in the 1990s to 600 billion KRW in the 2000s, driven by consumer groups such as four-person households and large families.

However, in the 2010s, the image deteriorated due to controversies over junk food (high-calorie unhealthy food), and after the global financial crisis hit the dining industry, family restaurants entered a decline. Marche and Bennigan’s, which lowered prices and changed to more popular menus, closed in 2013 and 2016 respectively. Since then, small and medium family restaurants have faced closures, and the surviving brands today are Outback Steakhouse, TGIF, and VIPS.

Outback Steakhouse, although its number of stores decreased after private equity acquisition, has been praised for clearly maintaining its brand identity as a ‘steak specialty restaurant.’ It has succeeded in differentiated marketing from competitors and is enjoying a second heyday. Following the COVID-19 pandemic, revenge consumption has intensified, increasing demand for premium steaks. In line with the non-face-to-face trend, the number of stores offering delivery has also increased. Outback Steakhouse’s delivery-capable stores, which were five at the end of 2019, rose to 20 by the end of last year and 32 as of the end of last month.

Inside the TGIF store. Photo by Lotte GRS website

The situation is somewhat different for TGIF. Lotte GRS, which acquired TGIF in 2002, has been unable to overcome the sluggish family restaurant market and has been reducing the number of stores. The number of TGIF offline stores has steadily decreased from 31 in 2016 to 27 in 2019 and 15 last year. Unlike Outback Steakhouse, the biggest issue is that TGIF has failed to find its own identity.

An industry insider said, "The rapid increase in single-person households, consumers’ more sophisticated tastes, and the prolonged COVID-19 situation for about a year and a half since last year have dealt a direct blow to sales," adding, "The future growth of family restaurants depends on expanding delivery stores and specializing and upgrading offline stores."

This content was produced with the assistance of AI translation services.