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Value Oriented Restaurants Such as T.G.I. Friday's and The Original Pancake House
 Find Niche with Casino Hotels
By Howard Stutz, Las Vegas Review-JournalMcClatchy-Tribune Regional News

Apr. 6, 2008 - -Mike English pops into the Green Valley Ranch Resort every now and then to place a sports wager.

The Original Pancake House inside the Henderson casino, however, brings him into the gambling hall more often.

The restaurant, a franchise of the nationwide chain, has been part of Green Valley Ranch since the resort's opening in 2001. Stephan Freudenberger, who is the Clark County franchise holder for Original Pancake House with his wife, Kim, said revenues at the Green Valley Ranch restaurant easily surpass the business brought in at any of their three other Las Vegas Valley locations.

"It's been a good relationship," Freudenberger said. "Good for us and I think good for the casino as well."

Station Casinos executives hope the restaurant customers will also spend a few dollars gambling before or after they eat, just as English does on occasion.

"We might play slot machines every now and then, but not much," said English, who was dining with Jessica Fairlamb one morning at the Original Pancake House. "We come here maybe two or three times a week to eat because it's good and convenient."

The relationship between Station Casinos and the Original Pancake House is being replicated throughout the gaming industry's locals market.

Strip casinos attract Emeril Lagasse, Kerry Simon, Charlie Trotter, Mario Batali and other celebrity chefs, along with their legions of foodie followers. Branches of famous, high-priced New York eateries, such as Rao's and Mesa Grill, have set up shop on Las Vegas Boulevard as well.

Local casino companies are bringing in famous names from the value-oriented restaurant market. Last year, Boyd Gaming Corp. added a T.G.I. Friday's to The Orleans' menu of restaurants. On a smaller scale, Dunkin' Donuts will have stores in several Boyd Gaming casinos.

Station Casinos, in addition to bringing The Salt Lick Bar-B-Que from Austin, Texas, to Red Rock Resort and Santa Fe Station, has asked Original Pancake House to put another branch inside the $675 million Aliante Station, which is scheduled to open later this year in North Las Vegas, and take on a larger role. The restaurant will serve as the hotel-casino's primary dining restaurant.

"It's a tremendous opportunity for us and also for our franchise," Freudenberger said.

Restaurant competition is increasing throughout suburban Las Vegas and casino operators want to ensure customers view the resorts as a one-stop location, a place to both gamble and dine.

"We've listened to our guests, and they have told us they want great food in a place they are comfortable with that has value," said Mark LaVoie, corporate vice president of food and beverage for Station Casinos.

That means, LaVoie said, not only must Station Casinos offer their company-branded eateries, such as the Broiler seafood restaurant or The Feast buffet, but well-known franchises, such as Original Pancake House.

"I would agree these restaurants definitely make a difference with our customers," LaVoie said. "There is a good familiarity and they are a way for our customers to stretch their dollars."

Boyd Gaming Vice President of Communications Rob Stillwell agreed that customers are more comfortable with familiar restaurants. For example, the company has had a long relationship with Tony Roma's, a casual dining restaurant that specializes in ribs. Tony Roma's has operated inside the company's Fremont for more than 15 years. Another Tony Roma's operated for 10 years inside the company's since-imploded Stardust on the Strip.

Stillwell said T.G.I. Friday's has brought loyal customers to The Orleans since the restaurant opened last year.

"For us, it's about partnering with known brands," Stillwell said.

Similar to the Original Pancake House, the Friday's inside The Orleans is not only the top-revenue-producing Friday's in Nevada, it's the top-revenue-producing Friday's among the 68 restaurants owned and operated by The Briad Group of Livingston, N.J.

"I know our partners are happy because not only does The Orleans target locals, but we have 1,886 hotel rooms that bring in a large tourist component as well," Stillwell said.

Casino operators like the arrangement because it provides the companies steady revenue through the lease agreements without the expense of operating the restaurant. Meanwhile, the casinos can still provide dining options for the customers.

"If the fit is right, then this is something we will continue to look at," LaVoie said.

For the restaurant operators, working within the confines of a casino has its differences from a stand-alone location.

The hotel-casino company handles construction of the restaurant facilities, although the restaurant operators have some input to make sure the space meets with the franchises' design standards.

Often, restrooms are shared with the casino, opening more space for the restaurant. Freudenberger said his Original Pancake House inside the Green Valley Ranch Resort has 25 percent more seating than his stand-alone restaurants. The planned restaurant at Aliante Station will be even larger.

The move inside a casino is often more cost-effective for the restaurant because of today's economy. Land prices and construction costs are soaring while casinos are mostly in populous areas with a built-in customer base.

"We pay rent and utilities just like just like any normal tenant," Freudenberger said. "Our restaurant has to fit into the theme and concept of the casino. At Green Valley Ranch, I used my own builder, but we were guided by their architect."

The Friday's inside The Orleans is about 25 percent smaller than a typical stand-alone Friday's because of the space consideration where the restaurant is located. But that hasn't slowed profits.

Smokey Hughes, senior vice president of operations for The Briad Group, said the restaurant has been a perfect fit with Orleans customers. He thought the restaurant works best at The Orleans because of the customer mix between tourist and locals.

"You think of a casino and you think of fun and that's what the Friday's brand is all about," Hughes said. "The goal, once they get customers into the casino, is to keep them there the entire day. Maybe someone will watch a movie or go bowling and that's why I think we're a perfect match because of our casual dining atmosphere."

Friday's and the Original Pancake House pay space lease fees to the casino companies. Both restaurants employ their own staffs separate from the casino. Unlike a typical casino coffee shop, the Original Pancake House does not have a keno board and does not offer keno runners.

The restaurants often vary their menus inside the casino. Original Pancake House will offer more lunch and dinner items when it opens at Aliante Station.

The Friday's inside The Orleans is busier during nontraditional restaurant hours than its stand-alone counterparts.

"That's probably due to the nature of the 24-hour casino business," Hughes said. "But we don't mind. There are a lot of hidden advantages to operating in conjunction with a casino."

Pat and Orville Smith of Henderson said they visit the Original Pancake House in Green Valley Ranch Resort almost daily. Breakfast often precedes time playing the casino's slot machines.

"We're very loyal to this restaurant," Orville Smith said. "We've been coming here for six years."

Sometimes, restaurant-casino marriages don't work out.

An Outback Steakhouse restaurant closed last year, less than a year after it opened at Arizona Charlie's Decatur.


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