Innovation to Imitation

In the 1920s, there was an emerging restaurant chain selling $0.05 hamburgers. The concept’s name and employee uniforms both spoke to an image of cleanliness. Store designs resembled royal buildings. 

 

Actually, there were two.

 

Founded in 1926, White Tower Hamburgers was eerily similar to White Castle, which was founded in 1921. As it turns out, the founders of White Tower had visited White Castle and, inspired by the chain’s success, decided to open their own version in Milwaukee, Wisconsin, before quickly expanding across the Midwest. As you’d guess, the chains ended up in court before the end of the decade. White Castle would come out on top, though White Tower would continue to grow until the 1950s. 

 

Legal proceedings aside, this serves as an early example of “stealing” in the restaurant industry. There are some ideas that can’t be stolen, such as branding or copyrighted items, but not everything can be claimed. And if one brand is finding success with a particular item, ingredient, value proposition or service model, you can bet someone else will try it. 

 

In the restaurant industry, “stealing” can be thought of largely in two categories. First, operators often look at what their competitors, including both established and emerging chains, are doing to drive sales. Then, these operators will consider how their own brands might be able to incorporate what their competitors are doing into their own model. For instance, in 1989, Wendy’s launched a Super Value Menu featuring various items for $0.99. Then in 1990, Taco Bell nationally debuted a new value initiative with items priced at $0.59, $0.79 and $0.99. And then in 1991, McDonald’s introduced a value campaign offering $0.59 hamburgers and $0.69 cheeseburgers. 

 

Around the same time, Outback Steakhouse was founded and introduced a noteworthy new item: the Bloomin’ Onion. And all of a sudden, Chili’s, the brand that Outback co-founders Chris Sullivan and Bob Basham used to franchise, debuted the Awesome Blossom. 

 

“They say imitation is the sincerest form of flattery...We used to call it the ‘Awful Blossom’”

-Bob Basham, Episode 202, Innovators and Imitators 

 

This type of competitive monitoring is at the heart of restaurant industry market research. As much as operators want to understand consumer or menu data, analyzing emerging concepts and the performance of competitors is often an easier way to digest important information, as other brands can serve as real-time case studies.

 

In other words, consumer data might encourage you to consider a new fried onion appetizer. A historically successful fried onion appetizer at a competitor will all but force you to add one.

 

The other type of “stealing”, the type that White Tower took to the extreme but Royal Castle got away with, is when entrepreneurs try to replicate a successful concept, but with some distinction from the original brand. This copying is part of the reason why there were so many mini burger concepts in the 1920s and 1930s and so many casual steak concepts in the 1990s.

 

It is also why a handful of concepts strived to become the “Chipotle of ___” in the 2010s. 

 

In the early 1990s, foodservice industry research firm Technomic introduced the term ‘quick casual’ to define a new segment of restaurants. Eventually, these restaurants became known as fast casuals and soon enough, chains like Five Guys Burgers and Fries, Jimmy John’s Gourmet Sandwiches and Chipotle Mexican Grill were taking the country by storm. In the same way casual-dining restaurants carved out a niche between fast food and fine dining, so too were these new concepts setting themselves in a new-found market between fast food and casual dining.

 

Fast-casual chains started to drive the industry forward, and not just in terms of growth. If you asked me what the most prominent restaurant industry trend for the first two decades of the 21st century, I’d say, “fast casuals”. 

 

What was perhaps most significant about the fast-casual experience was how it put consumers in control over their visit. Guests could order at the counter and quickly leave, as if they were at a fast-food restaurant. Just as easily, they could order, find a place to sit and have a relaxing meal in a comfortable atmosphere, as if they were at a casual-dining restaurant. Segment lines were blurring, often to the detriment of traditional fast-food and casual-dining restaurants. 

 

Fast-casual menus were also designed to give consumers more control: many chains offered highly customizable options. While the fast-food chain Subway brought the build-your-own, assembly-line order format into the mainstream, this ordering style soon became synonymous with fast casuals, headed by Chipotle. 

 

For example, there were the “Chipotles of Pizza” with Blaze, MOD, Pieology and a handful of others. We briefly saw the “Chipotle of Sushi” with How Do You Roll. Brands like Roti Modern Mediterranean and Cava were often perceived to be the “Chipotle of Mediterranean cuisine”. And even Chipotle got in on the action with its now-defunct ShopHouse brand, which was the “Chipotle of Southeast Asian cuisine”. 

 

And of course, this “Chipotles of” trend is not without precedent. 

In a previous episode, we discussed the wave of casual-dining brands emerging after Norman Brinker founded Steak & Ale. But even the father of casual dining himself sought inspiration from competitors, as Steak & Ale was inspired by Cork N’ Cleaver. Further, his Bennigan’s brand started out as a TGI Fridays but with an Irish theme. 

 

Operators getting ideas from competitors is how the industry grows, and it's how we define trends. Once a restaurant proves something can be successful, others will follow. And as they do, competition intensifies, products get elevated, and consumers determine the winners. It shows how one menu item or one concept can alter the trajectory of not just a restaurant category, but the entire industry. 

 

“There’s not a whole lot of original ideas in the restaurant business...if it is unique it doesn’t stay unique very long.”

-Bob Basham, Episode 202, Innovators & Imitators

 

After all, in the mid to late 1980s, there was a pervasive idea that consumers were shifting away from steak, as evidenced by Victoria Station’s bankruptcy in 1986 and the steep sales declines at Steak & Ale, which was then expanding its menu outside of steak with entrees such as fish, pasta and chicken. But then came Outback Steakhouse and its Bloomin’ Onion. And before you knew it, Chili’s had the Awesome Blossom, and the steak category was overflowing with new concepts like Logan’s Roadhouse, Saltgrass Steak House and Texas Roadhouse. 

 

So, what can a brand do to stand out if its best ideas are just going to be stolen by competitors? 

We talk to Bob Basham, the co-founder of Outback Steakhouse, to hear his advice and if there are any hard feelings toward Chili’s for the Awesome Blossom.