Weekly Wrap March 24: 'Buy Now, Pay Later' Apps for Takeout, Service Charges, and More
The most important hospitality industry news right now
Dave Foss
March 24, 2025
In this Weekly Wrap, we’re looking at fast-casual performance, mandatory restaurant gratuities in Florida, and more.
Q1 Same-Store Sales 21 Brands
The Headline: “Tracking the same-store sales of 21 major restaurant chains”
The Source: Restaurant Dive
What You Need to Know:
From Applebee’s to Starbucks, publicly traded chains have implemented a wide range of strategies in the past eight quarters to boost same-store sales in a time of high consumer price sensitivity.
Some of these efforts have already borne fruit: Chili’s same-store sales skyrocketed in the past few quarters. Other casual chains continue to experience a sales slump. Fast casual chains have maintained their momentum as demand continues to drive traffic and sales bumps, and QSR brands have generally posted mixed results.
Check out how 21 major restaurant brands in the QSR, fast casual, casual and pizza categories have performed in the past eight quarters. These charts will be updated on a quarterly basis.
Our Take:
Quick Service is struggling. Stagnant growth is an indicator that a combination of stagnation in the brands and guests value perception has become an issue.
Fast Casual continues to dominate, and growth is uninhibited. Consumers want a slightly elevated product in a slightly more comfortable setting, but the same quick service that can keep them moving through their day.
Casual Restaurants, with the exception of Chili’s which has seen explosive growth, have not fared well, and have not for a while. This is because most of the brands have not been innovating or evolving to keep up. Some smaller brands, like North Italia and Culinary Dropout (which are both owned by the much bigger Cheesecake Factory Incorporated), are doing very well because they are innovating, and as a result feel more welcoming and more with the times.
Chili’s on the other hand is constantly evolving, and, to be honest, probably deserves its own deep dive into what they are doing right.
Overall, I think QSR’s need to elevate a little to catch up to fast casual, and casual restaurant chains need to take a page out of the Chili’s playbook and stop looking in the past and get with the trends.
Auto Grat/Service Charge Battle in Florida
The Headline: “Florida might ban mandatory restaurant gratuities and service charges”
The Source: Nation’s Restaurant News
What You Need to Know:
Florida lawmakers have proposed a bill amendment that would ban automatic restaurant gratuities for parties of five or fewer and would also allow guests to decline paying service charges and gratuities if they complained about service quality.
The original bill, HB 535, allows hotels and restaurants to easily remove nonpaying guests from the premises, and has already passed multiple state government committees. According to Click Orlando, state Rep. Demi Busatta (R-Cape Coral), proposed the amendment after dining out at a restaurant in Miami that had both a service fee and preset mandatory gratuity.
…
It's not just Florida that has proposed legislation in response to fee fatigue. Last year, former President Joe Biden announced the launch of a new strike force to fight “unfair and illegal pricing,” with the goal of saving American consumers nearly $20 billion in junk fees and to promote more competitive pricing in the corporate community.
More locally, California and Illinois have separately considered legislation to crack down on service fees and surcharges, including ticketing websites, airlines, and restaurants. In California, however, the junk fee bill was amended to exempt restaurants from the law.
Our Take:
I have a lot of conflicting views on this. When fees are used appropriately, with purpose, and communicated clearly, I think they can help some establishments bridge the pay divide between front and back of house.
But there are downsides. If the charge is labeled as a “service charge” and not a gratuity, technically that money can go to the house. Yes, it can be used to pay higher wages to back-of-house employees (places like Coperta in Denver have had real success with this model). But I also know there are unscrupulous owners and managers who’ve pocketed that money without improving staff wages.
The other issue is communication. Some places say “THIS IS NOT A GRATUITY” and leave it at that. Okay, so where does the money go? I’d love to know. Then there are the auto-grat spots (looking at you, Miami) that tack on an additional gratuity line anyway. I remember being in Miami and the server explained that the auto-grat was “for the server, but if you’d like to leave extra that goes to the rest of the service staff,” which anyone in the industry knows is bull. At least they said something — most places in Florida don’t. It just shows up, buried in the check, and if you’re not looking closely, you double tip, especially when the “additional gratuity” line omits the “additional” part, which is a little shady.
(I probably wouldn’t be this worked up if Representative Busatta hadn’t also received really poor service in Miami and still had both a service fee and an auto-gratuity tacked on.)
At the end of the day, the service charge and auto-grat battle is only heating up. This won’t be the last time it shows up in legislation. So if you use these tools, use them responsibly and communicate clearly. And if you’re in a state that doesn’t allow service charges, continue on with your day.
Buy Now, Pay Later…for Takeout
The Headline: “‘Buy Now, Pay Later’ Apps Are Coming for Your Takeout Order”
The Source: Eater
What You Need to Know:
Just in case you were starting to think that the dystopian capitalist hellscape that we currently live in couldn’t get any worse, digital financing company Klarna announced on Thursday that it had partnered with DoorDash to allow customers to finance their food orders. At a time when recession fears abound and wages are more stagnant than ever, this is a uniquely terrifying proposition.
For those who aren’t familiar with Klarna, the financial tech (or “fintech”) platform allows users to split their purchase into four payments. Similar to Afterpay or PayPal’s Pay In 4, Klarna does not charge interest on these payments, which are usually billed every two weeks. That means if you spend $100 on pizza or sushi, you’ll make four payments of $25 each over the next two months. Klarna, meanwhile, makes its cash by charging companies like DoorDash and Target merchant fees, earning a percentage of each order made using its service.
Our Take:
As consumers continue to tighten their belts, voluntarily or otherwise, we are going to see more and more ways to get people to spend with “pay later” options. While Klarna is a little more mainstream and not necessarily predatory, it’s still a step in the wrong direction and will likely be abused by consumers, because if you let people rack up this type of debt, unfortunately they will.
If the economy and consumer sentiment continue on their current trajectory, we can expect to see more predatory versions of this, and that is incredibly concerning.
The Headline: “The Cheesecake Factory is overhauling its menu”
The Source: Nation’s Restaurant News
What You Need to Know:
The Cheesecake Factory Inc. has introduced a new menu overhaul that gets rid of 13 items but adds 22 back, including some new mocktails.
The Calabasas Hills, Calif.-based casual-dining brand, known for its large-scale menu, began offering the items this week. The Cheesecake Factory generally updates its 250-item menu twice a year.
Our Take:
Technically this is news, but it’s not really news. The Cheesecake Factory does this twice a year. Still, it’s hard not to marvel at how they do it.
As a restaurateur, the idea of adding 22 new menu items gives me anxiety dreams, the ones where I have 20 tables and keep forgetting to ring in everyone's order and every table hates me. The training alone is a feat — BOH has to learn how to execute each dish consistently, and FOH needs to be able to describe and sell them, on top of the other 250+ items already on the menu. I don’t personally dine at the Cheesecake Factory, but credit where it’s due: what they pull off is impressive, and they’ve managed to keep that machine running for decades.
While more and more restaurants are trimming and tightening their menus, Cheesecake is out here doubling down and expanding even more. And somehow, they’re still profitable. Someday I’d love to figure out how they do it.