Family-Style Restaurants Feeling Bite : Services: The recession is threatening their niche. Fast food places are cheaper, and for a few dollars more, diners can enjoy more ambience.

By BRUCE HOROVITZ

Feb. 15, 1992 12 AM PT

TIMES STAFF WRITER

No one leaves home with the intention of eating at a Denny’s restaurant, Jay Leno wisecracked on a recent “Tonight Show.” “You just kind of end up there.”

The audience’s laughter seemed to underscore a question haunting the entire family restaurant industry, particularly in Southern California: Why eat at a coffee shop when fast food is half the price and a meal with a little more ambience is just a few bucks more?

The family restaurant sector--mid-priced, no frills, sit-down eateries--is being squeezed during this recession like never before. Industry analysts estimate that 1991 sales dropped an average of 5%. The decline was closer to 10% in the competitive Southern California market, they add.

“Almost every restaurant in America has been beat up by the recession,” said Dennis I. Forst, analyst at the Los Angeles investment firm Sutro & Co. “But it is particularly competitive among family restaurants.”

While family restaurants scramble for market share, the fast food industry is “constantly nibbling at the heels,” said Janet Lowder, president of Restaurant Management Services, a Rancho Palos Verdes consulting firm.

Two of the most familiar names in Southland dining are frantically trying to keep from being gobbled up. Los Angeles-based Sizzler last week named a new president and hired a new advertising agency to upgrade its image. The chain has been especially hard hit because nearly a third of its 792 restaurants are in the tough California market.

Meanwhile, Denny’s--the Spartanburg, S.C.-based coffee shop chain with 122 restaurants in California--has junked several years of marketing plans aimed at getting rid of its image as a cheap place to eat.

In the past two years, Denny’s made scarce use of the popular $1.99 Grand Slam breakfast promotions. But in January, fast food price cutting forced it into discount meals at breakfast, lunch and dinner.

“We’ve had to take a page out of the fast food book,” said Bill Campion, director of marketing. While Denny’s sales have held up, he said, “everyone’s looking for a deal.”

The agency that creates Denny’s ads is, for the first time, considering a campaign other than the “Corlick sisters”--the often obnoxious but incredibly popular spokeswomen.

For more than three years, the older actresses have argued in commercials about whether the restaurant is called Lenny’s or Denny’s.

Although the campaign is regarded as the most effective in the chain’s history, after more than 70 commercials some say it has worn thin.

Even executives at Denny’s agency, D’Arcy Masius Benton & Bowles, say that while the campaign has raised Denny’s profile, it does not attract many younger diners.

Denny’s recently showed test groups of consumers some humorous ad concepts featuring actor Woody Harrelson, co-star of the TV show “Cheers.” The consumers told agency executives that they preferred the Corlick sisters--hands down. So the campaign continues, at least through this year.

Sizzler’s biggest headache may be of its own doing. The chain--which added 60 restaurants last year--successfully converted its image from steak house to salad and buffet restaurant. But in the process, it lost some of its most loyal--and best-spending--customers.

“We’re a victim of our own success,” said J. Hugh Duncan, who last week was named president and chief operating officer of Sizzler USA.

An industry consultant who asked not to be named was more blunt. Sizzler has not only been losing its best customers, it has been attracting consumers who simply want to eat a lot of food cheaply, the consultant said. “This doesn’t sound very nice,” the consultant said, “but some people go there and eat like pigs at the trough.”

As a result, steak dinners account for less than 40% of sales.

The selection of Duncan--an image maker who has never worked in the restaurant business--indicates how far Sizzler is willing to go to turn things around. Duncan, 46, has been a residential real estate developer for six years--and before that was president of the Los Angeles office of the ad agency Foote, Cone & Belding.

To revamp Sizzler’s image, he said, “our new agency may be our most powerful tool.”

The agency, Los Angeles-based Dailey & Associates, has a solid track record of making the average seem extraordinary. Dailey successfully revamped the image of E & J Gallo wines from that of low-budget product sold by the gallon to a brand that upwardly mobile couples serve at dinner parties.

Sizzler’s next ad campaign “will focus on quality and good food,” said Phillip Joanou, Dailey’s chairman. “It’s not going to be about price.”

For now, Sizzler can’t afford to ignore price entirely. This month, it is blanketing the Los Angeles market with coupons.

All in the Family

These are the top 10 mid-scale family and steak restaurant chains ranked by total U.S. sales in thousands of dollars in 1990:

U.S. sales Sales per unit Chain (thousands) (thousands) Units Denny’s $1,686,720 $1,200 1,294 Big Boy 1,040,000 1,137 915 Shoney’s 991,279 1,422 734 Sizzler 903,100 1,464 640 Ponderosa 651,000 924 727 Friendly 520,000 640 799 Perkins 472,000 1,340 399 Bonanza 446,000 924 420 Western Sizzlin 445,000 942 445 Golden Corral 440,000 1,000 459

Source: Technomic Inc., Chicago