CASUAL DINING, NOT FAST-FOOD, CHALLENGES MOM'S MEATLOAF

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The restaurant industry has become a '90s wet nurse for consumers too busy to prepare cozy, family meals.

The casual dining and quick-service segments are answering consumers' demands for a comfy setting by marketing wholesome meals and togetherness to value-conscious families.

Although casual dining chains were first to serve reasonably priced meals in a an inviting setting, the quick-service industry has proved itself a quick study. Seeing the trend as a possible answer to their dinner-daypart woes, fast-feeders are creating new venues that replicate some of casual dining's most popular features.

Boston Chicken forged the trail with its "freshly prepared meals," and its success is being followed by McDonald's Hearth Express test, Roy Roger's Double R Grill, and a gaggle of skinless, boneless, wood-fired and rotisserie chicken chains.

On a typical weekday night, Hearth Express-opened since September in suburban Chicago-is packed to the gills. Families line up to place orders for rotisserie chicken, meatloaf or ham, then step up to the glass counter to select side dishes and freshly baked bread.

Prices are reasonable: A $12.99 dinner for two to three includes a whole chicken; one-half of a meatloaf or three ham slices; potatoes, two side dishes and a loaf of bread.

Although McDonald's anticipated the restaurant would attract a take-out audience, the majority of customers eat in.

"It's a nice dining room," says one mother of two children on a recent week night, pointing to the quilts and bookcases that line the light wooden walls. "Besides, it's just easier to eat here than to take it home."

The restaurant seats 75, including tables on an outdoor patio. McDonald's soon will double the seating to accommodate the larger-than-expected dine-in audience.

Casual dining sales last year were up 13.7% to $10.3 million; quick-service sales over the same time period grew roughly 7.2% to $63.6 million.

"I think what's fueling [the casual dining segment] is its reputation to the adult affluent population for good food, environment and entertainment," says Ron Paul, president of restaurant consultancy Technomic. "It's become the evening out."

Outback Steakhouse, a 193-unit chain, is using the casual dining allure to peddle what until recently has been a dining taboo: red meat.

"We're offering fine dining food at a casual dining price," says VP-Marketing Nancy Schneid. The chain's "No rules. Just right" mantra makes customers feel at home, "like they can wear blue jeans, like they don't have to use the right fork," she adds.

Competitor Lone Star Steakhouse & Saloon has doubled in size, to 84 units, in one year.

"We want to be more casual-it just fits our lifestyle better," says Allan Hickok, restaurant analyst with Piper Jaffray, a brokerage house.

The casual dining segment is strong and young enough to support several new players, Mr. Hickok adds.

The 400-unit Applebee's Neighborhood Bar & Grill has made a name for itself in suburban and rural markets. The restaurants serve sandwiches, salads and limited dinner entrees, and their Americana decor is designed to attract neighborhood families. Current development in more urban markets will test the concept's viability.

General Mills Restaurants, operator of Olive Garden and Red Lobster, sees its chance to strike gold again with its latest concept-China Coast. Several competitors, meanwhile, are lining up to tap Olive Garden's success, including PepsiCo's new East Side Mario's dinner house; Romano's Macaroni Grill, owned by Brinker International; and Spaghetti Warehouse.

Chains with more varied menus-like Chili's Grill & Bar, Applebee's and TGI Friday's-all registered strong growth in 1993. All three increased their number of U.S. units between 15% and 20% last year.

But with fast-food chains now on the bandwagon, the casual dining restaurants will have to work hard to protect customer counts.

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