Monday, May 14, 2007

Buy or birth?

Not a word will be said here about that baseball team from the Bronx that looks phenomenal on paper but somehow fails to deliver in the field. Nope, this is an installment about Darden Restaurants. Which, these days, might be especially sympathetic to the Ya—oops, almost said it. I have to remember I’m writing about the other party that’s having a tough time developing young talent to complement the aging all-stars who stud its roster.

Not that Darden doesn’t have an astounding rookie in Seasons 52, the all-fresh-ingredients concept that it’s been cultivating as carefully as a patch of heirloom zucchini. But it was only a week ago that it decided the slightly older Smokey Bones would never meet home-office hopes, 86ing it like Albert Bell. More quietly, it also cut its next-youngest brand, Bahama Breeze, by nearly a third, shuttering nine of 32 units. Despite its indisputable and long-time success, Darden hasn’t exactly bedazzled as a farm system for tomorrow’s brands.

But the failure of Smokey Bones calls into question more than Darden’s ability to develop new concepts. Indeed, it raises a larger question, of whether casual-dining’s dynasties can still hatch big-league new brands. As multi-billion-dollar companies with the extensive infrastructures typical of Fortune 500 institutions, can they still come up with the winning idea?

Already, many of the leaders are acting in a way that barks “No!” Outback parent OSI gave up on the home-grown route long ago, extending its roster since its ill-fated New Orleans concept by buying young brands with promise. Roy’s, Fleming’s, Leroy Selmon’s, Bonefish Grill, even the new Blue Coral—all were the brainchildren of outside entrepreneurs, not a corporate new-business team. Ditto with Brinker International, with Maggiano’s, On the Border and Romano’s Macaroni Grill.

And now Darden is taking the same on-ramp. Two days after the company’s weekend announcement about Smokey Bones, CEO Clarence Otis confirmed to investors that the divestiture of roughly half the chain and the closing of the rest would facilitate the company’s purchase of a new growth vehicle. For the first time since it collaborated with the legendary Thad Eure on the development of a now-divested casual concept called Darryl’s, the company is going to let someone else do the development and incubation.

The drama arises from more than a big-name player’s break with tradition. For one thing, OSI and Brinker have had mixed results with the adoption approach. Before greenlighting Blue Coral, a seafood concept conjured up by Paul Fleming in collaboration with longtime partner and current OSI CEO Bill Allen, the company scrapped Fleming’s notion of a lower-priced P.F. Chang’s, called Paul Lee’s Chinese Kitchen. And Chili’s sold Corner Bakery, a venture it’d purchased from Rich Melman, the Dumbledore of restaurant concepts.

There’s also the sport of having two top challengers stick with the self-development approach. Last fall P.F. Chang’s banged the dinner gong of its new Taneko Japanese Tavern, its home-cultivated take on the neighborhood bars of Japan. And just a few weeks ago, The Cheesecake Factory disclosed that it’s cooking up a new venture called Rock Sugar Pan Asian Kitchen, featuring an eclectic Southeast Asian menu.

So which method is going to be the big winner, buying a starter kit, or developing the prototype in your own garage? Why don’t I just predict how many games ahead of the Sox the Yankees will be by September?

1 comment:

  1. Peter
    Great take on the start up questions. I think that going outside is where they are all headed. You hit it on the head - too much overhead and they take a big corporate mentality instead of a quick and low cost entrp approach. The real issue is that most lose the new concpet in translation to the company's same old method of operating. Good news for those of us who like creating start ups.....more to come.