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Saturday, July 13, 2024

NC trend: Golden Corral tests an alternative to buffets.

Raleigh-based Golden Corral is looking to offer a simpler alternative to family dining with a pilot project just outside of downtown Southern Pines.

Called Homeward Kitchen, the 3,500-square-foot restaurant offers drive-thru, carry-out and delivery as well as dine-in options, and a menu that ranges from egg bowls for breakfast to salads and sandwiches for lunch as well as Golden Corral staples such as pot roast and fried chicken. Such comfort food has been a mainstay of local independent restaurants, many of which have faced tough sledding because of pressures from the pandemic, labor shortages and inflation.

And it’s an attempt by Golden Corral to address what COVID exposed in its core business. Relying solely on in-house dining crippled the company.

This Homeward Kitchen opened in December, and CEO Lance Trenary is optimistic about its potential. He says a second will open in Richmond, Virginia, this fall and the company believes there’s a potential for 500 locations across the country. At a target of $3 million in revenue per restaurant, that’s a potential additional $1.5 billion in revenue for the company, owned by Raleigh’s Investors Management.

“We’ve had a lot of inquiries from franchisees and outside investors looking to build a Homeward Kitchen,” says Trenary. “We’re the ones kind of holding it back, saying let us continue to work on the concept and make sure the model is working well.”

To be sure, Trenary believes Golden Corral restaurants have growth potential. That’s an understatement, given that the chain’s 400-plus restaurants reported average same-store sales gains of 14% in 2023, when the company scored $1.5 billion in revenue. Coming out of the pandemic obviously was a factor, but such growth was strong by any measure. Homeward Kitchen provides another, less capital-intensive way to expand.

While the typical Golden Corral sits on 2 to 3 acres and the building size is between 10,000 square feet and 12,000 square feet, a Homeward Kitchen needs just about three-quarters of an acre and a building that’s between 3,000 square feet and 3,500 square feet. That provides more opportunities for locations. “Lowering the entry costs gives our franchisees a broader portfolio,” says Trenary. “That’s where the fast-casual idea started surfacing.”

The Southern Pines location is in a remodeled Chick-fil-A, while a Super Target and BJ’s Wholesale are opening on adjacent property. Trenary says early outside research suggests that customers like the flexibility offered by a Homeward Kitchen, but the concept needs tweaking. “We’re not doing the volume that we expected,” he says. “But when you’re launching a completely new concept with no brand visibility, it’s difficult to get off the ground.”

Among the changes being considered: Adding more healthy options to the menu, and changing how customers order takeout and delivery on the Homeward Kitchen website. The company is also launching some catering options. Customers so far are trending slightly younger than Golden Corral clientele.

“We haven’t gotten any credit for family meal replacement,” adds Trenary, citing an industry term for less home-cooking and more take-out dining. “That’s really a sweet spot for us. But we haven’t gotten that word out well. You can come through our drive-thru and order a pot roast and two or three vegetables, homemade bread pudding. It doesn’t have to be fast food.”

Trenary also foresees reducing the seating space inside to about 75 seats from more than 100 currently. More than 60% of the initial sales are from drive-thru and take out.

There’s no Golden Corral near the Southern Pines location, and Trenary says he’s not comfortable putting one within five miles of its core restaurant to protect the business of current franchisees. The Richmond Homeward Kitchen is about eight miles away from the nearest Golden Corral.

“My gut feel is three to five miles,” says Trenary, “depending on the density of the market. We see this playing out well in dense, metropolitan markets.”

The company will place the first half-dozen Homeward Kitchen locations in the Carolinas and Virginia, he adds, so that it can keep close tabs on their performance. It’s also hired a vice president of operations to oversee Homeward Kitchen, a signal to Golden Corral franchisees that it’s not taking away anything from the core operation. Trenary says the company is looking in Charlotte, and he’d like to have one closer to his Raleigh office.

“As we moved through COVID, it became evident that we needed to think about different access points to our customers,” says Trenary. “Our business model was shut down. That’s what really launched this work. And Homeward Kitchen answers a lot of questions for us.”

Chris Roush
Chris Roush
Chris Roush is executive editor of Business North Carolina. He can be reached at croush@businessnc.com.

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