Sizzler USA Inc. wants to attract Millennial families to the 57-year-old brand.
Restaurants known for their steak and all-you-can-eat salad bars now “hand-cut” the meat on-site, said Chief Executive Kerry Kramp, and have added kale, quinoa and other trendy-healthy components to their greens offerings.
It’s a balancing feat for the Mission Viejo-based “family casual” chain that weathered a mid-1990s bankruptcy when it closed 130 stores, followed by another downturn during the recession 12 years later, while sporting an image in some minds that’s as battered as an order of fish and chips.
Kramp and partners Jim Collins and Kevin Perkins bought the U.S. operations in 2008 from its Australia-based parent company. The management team also has equity.
“This is not a seven-year flip,” Kramp said. “We’re building a company.”
He knows the jokes—your grandfather eats there; the commercials are cheesy—but said Sizzler can draw a new generation of devotees.
Kramp is 59—two years older than Sizzler itself—and “smack in the middle” of the baby boomer generation. He ate at Sizzler “sometimes” as a kid and now, of course, much more often.
The first time Kramp’s Millennial daughter visited a Sizzler was with him.
“Now she likes it, and she brings her friends.”
Sizzler’s revenue declined 2% to $272 million from 2013 to 2014, according to Business Journal research, and the chain has closed 36 stores since 2011. Remaining locations are stronger, however: Same-store sales grew about 6% from 2012 to 2014 and are within striking distance of $2 million apiece.
There are 138 Sizzlers in the U.S., 121 of them franchised.
Millennials—Americans born from roughly the early 1980s to the latter 1990s—number about 43 million, according to 2012 U.S. Census data. The group recently topped baby boomers as the biggest generation overall and Generation X as the largest in the labor pool, according to data from Demographic Intelligence in Charlottesville, Va., and Washington, D.C.-based Pew Research that was cited this month by the Wall Street Journal in an article about the first Millennials who are now in their early 30s, marrying and having children.
Comeback
That’s who Kramp is after.
He said parents of young children appreciate a Sizzler’s casual environment.
“If parents need to get up and walk around with their children, they can do that,” he said, because people already walk around in a Sizzler to get to the “craft salad bar experience.”
He said that while many chains zig to fast-casual—an upgraded version of fast food—he wants Sizzler to zag toward greater value.
“People are coming back” to eating real dinners, he said, and when they do, he wants them to find a restaurant that still offers all-you-can-eat, but also a station for customers to order their own custom-made salads, which they can take to go during a busy lunch hour.
Sizzler staples of steak, fish and burgers are still on the menu, because to get to the point where diners can have anything they want, Kramp is finding he has to serve nearly everything.
“You have to offer a lot of things people don’t eat,” he said.
His plan is to tie new efforts into what still resonates with Sizzler customers: American family comfort food.
Darren Tristano of Chicago-based restaurant industry consultant Technomic Inc. said Sizzler’s family-casual approach has a shot.
Restaurants target “occasions” of eating out, he said, and while Sizzler “probably won’t win date night,” it can capture the most profitable of occasions, based on how often it happens and how much people spend: family outings.
“They have ‘fresh,’ and they have ‘value,’ so Kerry’s challenge is to evolve the brand to remain relevant,” he said.
Steak and Twitter
One way this could work was demonstrated in April when a 1990s-era Sizzler video for franchisees surfaced on YouTube with dated-looking images of families, a pony-tailed girl playing baseball, loving couples strolling in parks—and people eating at Sizzler.
The company responded with a Twitter hashtag and a dinner special, and donated to a hunger nonprofit. Meanwhile, the video has drawn about 2 million views to date.
The chain’s menu items have also been highlighted on a Sacramento cable TV cooking show that caters to foodies.
“Kerry’s modernized and updated the concept,” said Kevin Burke, a principal at Trinity Capital, a Los Angeles investment bank that focuses on restaurants.
Burke cited the menu changes, fresh marketing, and improvements in decor and service.
Franchisees and the company have spent millions of dollars on renovations since Kramp and partners bought it, Kramp said. He figured about 70% of the 121 franchised locations and 13 of the 17 company-owned ones have been upgraded at an average cost of $650,000.
A Sizzler franchise is $35,000, plus 7% royalties and marketing. It can cost $4 million to open one.
The restaurants—bright inside with a mountain-cabin stone-and-wood look—are replete with images of Americana: flags waving; people camping, parasailing, or horseback riding; children eating watermelon.
A display case shows marbled cuts of meat and bottles of wine.
Kramp talks up social media—and families.
“This is their Sizzler, not mine.”
