Weekly Wrap May 12: Starbucks' Rivals, Fine-Dining Delivery, and More
The most important hospitality industry news right now
Dave Foss
May 12, 2025
In this Weekly Wrap, we’re looking at declining sales and customer satisfaction at Starbucks, Shake Shack’s new support center — and full bar — in Atlanta, and more.
Coffee Wars
The Headline: “Why growing coffee competition could be a wakeup call for Starbucks”
The Source: Nation’s Restaurant News
What You Need to Know:
As Starbucks reports its fifth consecutive quarter of declining same-store sales amid growing competition from mid-sized beverage brands like Dutch Bros and 7 Brew, it's clear that even the industry leader isn't immune to rising consumer pressures.
Recent consumer data from Chatmeter reinforces this shift in coffee customer preferences. Analyzing thousands of customer reviews from 2023-2024, comparing Dutch Bros, Starbucks, and Dunkin', Dutch Bros emerged as a leader in multiple areas, including value and drink quality. While all three chains faced complaints about pricing, customer service, and beverage consistency, Starbucks and Dunkin' consistently trailed their newer competitor.
“At Starbucks and Dunkin’, pricing was perceived more negatively than Dutch Bros,” Chatmeter’s report said. “Customers complained about unexplained price increases after ordering, with some feeling misled and unheard when they tried to protest. In many cases, high prices paired with poor quality products or service led customers to question their loyalty to a brand. Sentiment on value declined at all three brands, with Starbucks seeing the biggest drop (6.3%), followed by Dunkin’ (4.3%) and Dutch Bros (2.6%).”
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Though online reviews typically skew negative, many of the complaints about Starbucks align with CEO Brian Niccol's current initiatives to revitalize the brand. His focus on mobile app improvements and store redesigns directly addresses two major customer pain points mentioned in the Chatmeter report: mobile ordering issues and uncomfortable seating.
Despite Dutch Bros' rising popularity and positive consumer sentiment, the beverage chain faces its own challenges. While customers praise its fresh approach and innovative drink combinations, operational efficiency in the drive-thru lane remains a problem, with some customers reporting 30-minute wait times. This issue has been acknowledged by CEO Christine Barone in multiple quarterly earnings calls.
Our Take:
Starbucks isn’t going anywhere anytime soon, but its market share will be decided on how effectively the new CEO can execute their vision.
As for Dutch Bros, while their innovative drink combos have brought them some accolades in the eyes of the consumer, this approach can only go so far. Operational inefficiencies — like 30-minute drive-thru wait times — are a fantastic way to turn off loyal customers. They would be smart to take a page out of Wingstop’s playbook, investing in technology to streamline and optimize operations.
One factor that often gets overlooked is the wholesale coffee industry’s struggles and how they’re impacting the retail/QSR coffee sector. Unlike the inflationary pressures and uncertainty facing other industries, the coffee sector has been dealing with these challenges for some time. Tariffs and rising costs are only adding to the fire, and this could weigh heavily on coffee brands in the coming months. It looks like 2025 will be a pivotal year for the coffee shop sector.
Chili’s/Applebee’s
The Headline: “Chili's sales are booming. Why Applebee's CEO says that's a good thing”
The Source: Restaurant Business Online
What You Need to Know:
The two archrivals in the bar-and-grill niche have long duked it out for market share. But Chili’s earlier this week reported a stunning 31.6% increase in same-store sales on traffic growth of 21% for the first three months of the year. Meanwhile, Applebee’s, which is scheduled to report first quarter earnings May 7, has had seven consecutive quarters of same-store sales declines.
Still, John Peyton, CEO of Applebee’s parent Dine Brands, sees a rising-tide-for-all-boats opportunity.
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And, at a time when restaurant industry pundits were declaring the death of casual dining, he said, “[Chili’s] did demonstrate that there’s an ability to track new guests. There’s an ability to get more business out of their current guests. And there’s absolutely room for two or three competitors.”
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Applebee’s earlier this year said it plans to take ownership of 47 restaurants from some franchisees with the goal of showcasing a new Lookin’ Good remodel effort and other improvements. The 1,600-unit chain has been almost entirely franchised for years.
The casual-dining chain is also accelerating development of dual-branded restaurants. Dine Brands is also the parent of IHOP, and the first dual-branded Applebee’s-IHOP unit opened in Texas earlier this year.
Our Take:
I love that the CEO is giving kudos to his most direct and dangerous competitor. He’s right, Chili’s success opens the door for competitors in the space to thrive. Chili's is absolutely crushing it right now. A 31.6 percent increase in same-store sales and a 21 percent jump in traffic in just the first three months of the year. That's massive!
Whether Applebee’s will actually be one of those competitors we’ll have to wait and see. Applebee’s is making changes that could take it into Chili’s territory or it could backfire drastically. The remodeling of several non-franchised outlets is the first test. The “Lookin’ Good” (terrible name) program has been explained as a multi-year effort to ensure all the company’s restaurants exceed consumer expectations for look and feel. This sounds great as the last Applebee’s I was in made me feel like I was dining at the turn of the century.
Look and feel will only get you so far, though. They may want to also add a “Feelin’ Good” initiative in which they focus on the service given at their stores. If the guest doesn’t feel great it doesn’t matter how much money you spend on the aesthetic, guests won’t come back.
As per the dual Applebee’s/IHOP branded units…I get it, but I don’t get it. I understand the theory and the ‘why,’ but I’m not sure it translates well in the general suburban setting of many Applebee’s locations. That being said, I do think it will thrive in semi-captured audience situations, like gas station rest stops, malls, and airports, or in areas with minimal dining options. Dine Brands, Applebee's parent company, is betting big on this, aiming for 40 dual-branded units globally by the end of 2025, with a dozen or so in the U.S. The first one in Texas seems promising, supposedly tracking towards $6 million in annual revenue. But still, I'm skeptical about the suburban play.
Overall I agree with Peyton’s sentiment on doors opening for competitors. And even though the major players are all vying for those dollars, the establishments with the most opportunity here are the independent operators. Consumers are looking for value, but also something different, which is something that independent operators definitely offer.
Fine-Dining Takeout
The Headline: “Delivering excellence: How this fine-dining Italian restaurant in New York aced delivery”
The Source: Nation’s Restaurant News
What You Need to Know:
It wasn’t just about putting food in a box, though. My team and I, especially Executive Chef Joe Vigorito, were determined to ensure that the quality of our dishes translated to a delivery setting. For 15 years, we had assumed that our food, particularly our pasta dishes, wouldn’t travel well. But we were pleasantly surprised. Some dishes, like our roasted chicken, actually got better in a box, with the steam keeping it extra juicy and the sauce tightening up nicely. For the pasta, Joe found that by slightly over-saucing, we could maintain the integrity of the dish by the time it reached our guests.
Packaging was another critical element. One of the things I learned from my time at Shake Shack was the importance of presentation and food safety in delivery. We ensured that each bag was neatly packed, labeled, and sealed shut. For me, personally, if a delivery bag isn’t sealed when it arrives at my house, I worry about tampering. I wanted our guests to have peace of mind. It’s those little details that I think set us apart from other restaurants offering delivery.
From the start, we also knew that partnering with the right platform was crucial to ensuring a seamless experience for both us and our customers. That’s why we decided to partner exclusively with DoorDash and Caviar for delivery. Their reliability and commitment to a high standard of service aligned with our own, and it gave us the confidence that L’Artusi’s quality would be maintained from the kitchen to the guest’s front door. We have a wonderful partnership with DoorDash, allowing us to scale our delivery operations while keeping the guest experience intact.
But the real story behind our success isn’t just about the operational side. It’s about our guests. The loyalty and support we received from our community was overwhelming. Our guests were excited to enjoy L’Artusi from their couch, and many of them ordered frequently, sent food to friends, and even picked up orders themselves. Their support allowed us to keep our business financially viable and, more importantly, bring back as many employees as possible. In fact, within a few weeks of launching delivery, we had full back-of-house employment and were able to bring back our entire front-of-house management team. That’s something I’m incredibly proud of.
We also realized that even when indoor dining returned, delivery wasn’t going away. The demand has only grown, with the National Restaurant Association reporting that more than half (52%) of U.S. consumers saying they believe that ordering delivery and takeout from restaurants is now an “essential part of their lifestyle.” That’s when we decided to lean into it and look for a space dedicated to producing delivery.
Our Take:
When you ask the majority of fine-dining owners about delivery they usually scoff. Chefs act like it's culinary blasphemy. And there are one hundred excuses not to do it; most of them are bullshit. "Our food doesn't travel well," "it'll cheapen the brand," "we're too busy." But they're missing the point. This isn't just for your burger joints and taco shacks. High-end can play this game, and do it very, very well.
Think about it. You're at home. You don't want the usual takeout. You want something a little more elevated. And there are plenty of people in every city who feel the same. They aren't hitting up your dining room every single night. Sometimes they cook, sometimes they order in. So why not take advantage?
The barrier to entry? It's practically nonexistent. You're talking packaging, a little marketing push, figuring out a delivery service, which admittedly can be a chunk of $$$ over time. But you've already got the food, the staff, the recipes. Yeah, you might tweak a dish or two, but let's say you pull in an extra $500–$1000 a night with delivery. That's a potential $182,500–$365,000 in gross revenue annually, with minimal overhead.
Yes, you need to figure out the logistics so delivery doesn't mess with your regular service. But that's a good problem to have. In today's world, with labor costs and expenses going through the roof, if you've got the space, you're crazy not to consider delivery regardless of your price-point. You're leaving money on the table.
Shake Shack Support Center
The Headline: “Shake Shack to open new support center, flagship restaurant in Atlanta”
The Source: Restaurant Dive
What You Need to Know:
- Shake Shack is opening its second U.S. support center alongside a new flagship restaurant in Atlanta later this year, according to a press release emailed to Restaurant Dive.
-The flagship restaurant will be the first company-owned location to feature a full bar and serve cocktails, beer and wine, per the press release.
-The 25,000-square-foot support center, located near the flagship location in The Battery Atlanta, a business and retail complex near the Atlanta Braves’ stadium, will house a test kitchen, meeting spaces and training facilities, the brand said.
Our Take:
Test kitchens and flagship locations aren't exactly groundbreaking in the restaurant world, but Shake Shack's latest move underscores the brand’s commitment to expansion — not just in terms of more outlets, but perhaps a deeper dive into limited-time offerings (LTOs) and even alternative revenue streams.
I’m particularly curious about the potential full-service bar. Is this a one-off experiment, a potential spin-off, or could it be Shake Shack's version of the Starbucks Reserve — rolling out in select major markets and neighborhoods? We will be following this one closely.