MW Restaurant chains are competing on in-store vibes to win back customers

By Bill Peters

Analysts say more welcoming atmospheres at chains like Starbucks and Cava can't hurt. But how much will they help?

Starbucks has tried to get back to the coffee-shop basics of the 1990s.

Brett Schulman, the chief executive of Mediterranean fast-casual chain Cava Group Inc., says he's been talking about the importance of restaurant atmosphere since before the pandemic, when digital ordering began reshaping dining-room spaces.

But as the restaurant industry navigates postpandemic business realities, his company is retrofitting its stores to bring in a bit more more natural light, comfier chairs and what, during an earnings call in May, Schulman described as "enhanced greenery" and warmer, more welcoming tones.

The chain, he said then, would "continue to challenge the idea that the dining room is a relic of the past."

"We know that people, as screens and technology further infiltrate daily life, are looking for reasons to get off the screen and connect in person," Schulman said in an interview last week.

He added that 65% of the chain's guests still want to come into its restaurants. The rollout of those new flourishes at Cava locations will continue through next year.

As restaurants try to claw back customers alienated by price increases and other service hiccups, a few chains - Cava $(CAVA)$, Starbucks Corp. $(SBUX)$ and Dave & Busters Entertainment Inc. $(PLAY)$ among them - are banking more on in-store atmosphere, after more than a decade of catering more to mobile ordering and an obsession with driving traffic.

Analysts say that at the very least those upgrades, which tend to happen across the industry anyway, can't hurt. How much they'll help is still a question.

The changes are happening as some sit-down casual-dining chains, like Chili's $(EAT)$, have shown signs of a resurgence this year, cranking up the pressure on fast-casual chains. William Blair analyst Sharon Zackfia noted that most fast-casual restaurants get about half their business from lunch and half from dinner.

"At dinner, they need to be competitive with casual dining," she said. "They need to have more of that experience. ... Consumers are picky. They're going to want a nice environment to eat in."

The upgrades come as some of the things that worked for quicker-service restaurants in previous years have recently shown signs of strain.

Fast-casual restaurants - which try to offer higher-quality food and atmosphere than fast-food chains like McDonald's $(MCD)$, but with similar service times - have had a bumpier ride this year, as consumers tire of higher-priced salads and bowls, and as casual-dining chains start to compete more aggressively on meal deals. Amid the ongoing discount wars in fast food, Wendy's Co. $(WEN)$ recently said it actually had too many promos, confusing customers. Last year, Chipotle Mexican Grill Inc. $(CMG)$ took steps to address claims on social media that it was skimping on portions.

Meanwhile, Starbucks said it would phase out its stores that handle only mobile and pickup orders, calling the format "overly transactional and lacking the warmth and human connection that defines our brand." After years of expanding its digital-ordering and drive-thru infrastructure - and trying to sell more food and customizable drinks - it is now pruning its menu and trying to untangle the mobile-ordering and pickup process at its other stores.

And as it faces falling same-store sales and tougher competition from faster-growing, drive-thru-centric coffee options, Starbucks has also tried to get back to the coffee-shop basics of the '90s. It is adding ceramic mugs and cozier seating to make its atmosphere more welcome, after some customers complained that its stores had become too utilitarian.

But some analysts have noted the chain is juggling a lot as it tries to recharge sales, and have wondered about the cost and potential hit to service speeds. Dan Ahrens, portfolio manager of the AdvisorShares Restaurant exchange-traded fund EATZ, said that as Starbucks tries to figure itself out, his fund was holding off on investing in its stock.

"It's pretty obvious to the outside world that they are trying to find their way and almost experimenting, if you will," Ahrens said.

Other recent remodeling efforts haven't necessarily saved restaurants, either. In April, gaming and restaurant chain Dave & Buster's - which is bringing in bigger TV screens and more immersive, tech-driven versions of games like darts and shuffleboard - said it would take a "more measured" approach to rolling out those remodels following mixed results. That remodeling program began in 2023.

"On remodels, we didn't properly test our prototypes," Kevin Sheehan, then the company's interim chief executive, said during an earnings call. "We didn't listen to our operators. We didn't prioritize target stores to be remodeled well and we spent well beyond budget on many stores."

Still, he said in June that over the previous three months, remodels had outperformed Dave & Buster's older stores. Darin Harper, the chain's chief financial officer, said it was working on forms of entertainment that would "gamify" guests' experience more, and allow for more group interaction.

Analysts say that refurbishing the front of the restaurant is often easier than in the back, where new kitchen equipment might require new training. And for some chains, franchisees can fall behind, since they have to put up the money to make the renovations, Zackfia noted.

"Usually when there's a refresh cycle, it's a multiyear refresh cycle," she said. "And sometimes, by the end of that five years, it feels like you have to start the next one."

-Bill Peters

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August 19, 2025 13:01 ET (17:01 GMT)

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