Family-dining restaurants offer full table service. They’re similar to the casual-dining format, although most family-dining restaurants don’t offer alcohol. Some family-dining restaurants may be open for longer hours, up to 24 hours a day for seven days a week.
In addition to lunch and dinner menus, family-dining restaurants offer breakfast menus. IHOP (DIN), for example, offers pancakes, sandwiches, appetizers, soups, salads, and desserts. The average check at a family restaurant is between $20 and $60.
Apart from chain family restaurants, single-location restaurants also compete in this segment of the industry. According to IBIS, single-location restaurants will record $141 billion, or about one-fifth of restaurant industry sales, in 2014.
Like other restaurant formats, family-dining restaurants are concentrated in states with a high population density, such as California, New York, and Florida.
Cracker Barrel Old Country Store (CBRL) had sales worth $2.64 billion in fiscal year 2013. DineEquity Inc. (DIN), which operates IHOP, had sales worth $0.64 billion. Denny’s (DENN) had sales worth $0.46 billion over the same period.
Other family-dining restaurants include Waffle House, Bob Evans Restaurants (BOBE), and Perkins Restaurant and Bakery. You can also gain exposure to the restaurant industry through the exchange-traded fund (or ETF) Consumer Discretionary Select Sector Standard and Poors depositary receipt (or SPDR) (XLY).
The average earnings before interest, taxes, depreciation, and amortization (or EBITDA) margin of the above players in the chart was 18% in 2013, and the average net profit margin was 6.7%.
In the last few parts of this series, we discussed the four restaurant concepts. There are two more restaurant concepts that fall under the food prepared outside the home umbrella. They include pizza places and cafés. We’ll look at each of these concepts next.