Competition | September 2010 | By Daniel Smith

Assault on Casual

As casual-dining traffic counts fall, quick serves are positioning themselves for potential new diners.

From his Colorado office, Boston Market CEO Lane Cardwell is targeting some free agents—dining free agents, that is.

“There are some customers out there open to where they’ll be eating, and Boston Market is happy to capture that business,” Cardwell says.

Cardwell is referring specifically to the significant chunk of diners who are in limbo after the recession and were forced to trade down for price’s sake.

Indeed, as casual-dining traffic counts continue to decline, quick serves—fast-casual outlets, in particular—are targeting the fallout and trying to secure new business. In menu, service, environment, and experience, quick-service eateries are treading on casual-dining tradition. 

In May, for instance, Cardwell instituted a 10-store test at Boston Market outlets in Florida, upgrading stores to feature real plates and silverware, tableside food delivery, and bus service. “Casual-dining food at fast-casual prices,” Cardwell calls it.

“Our food didn’t look like casual-dining food on a disposable plate, but now it does,” he says. 

Boston Market’s attempts to attract casual-dining consumers, a pursuit joined by many of its quick-service peers, are a direct attack on casual dining’s continued struggles. 

“By and large, the quick-service chains understand that casual dining is in a weakened position and they’re going after it,” says Eric Giandelone, director of research for Mintel Foodservice, a market research firm. 

“Casual dining is a 60-minute solution to a 30-minute problem,” Cardwell says. “They’re wonderful restaurants to go to, but the time, tip, and money one spends there are making quick serves a more attractive dining option, particularly in today’s environment.”

Casual dining’s recent struggles are well documented. The recession hammered a number of full-service heavyweights, including T.G.I. Friday’s, Chili’s, Applebee’s, and Bennigan’s, which shuttered 150 company-owned units in 2008 following a bankruptcy filing. 

According to the NPD Group, casual-dining traffic fell 4 percent from March 2009 to March 2010 despite aggressive price promotions and widespread marketing campaigns from some of the segment’s major players.

The decline opened the door for quick-service eateries to grab a chunk of business.

According to Technomic’s 2010 Fast Casual Restaurant Chain Report, sales and units at the nation’s top 100 fast-casual chains grew by more than 4 percent from 2008 to 2009, a sign that fast casual is, the report says, “ideally positioned for the new economic and social climate.” 

Technomic research analyst Naomi Van Til says unemployment, a lack of differentiation among casual-dining chains, and customers trading down to quick serve’s better value are some of the central factors behind not only casual dining’s decline, but also quick serve’s ascent. 

But the quick-serve industry’s rise at the expense of casual did not emerge by accident. Like Cardwell’s plans at Boston Market, quick-service brands saw an opening and latched onto the opportunity by offering a number of upgraded dining components.

Alcoholic beverages

Once the province of casual-dining restaurants, alcoholic beverages have increasingly wiggled into the quick-service arena. According to Technomic, nearly 40 percent of the top 100 fast-casual operations serve beer, wine, or spirits.

Nearly all Noodles & Company restaurants serve beer and wine. The Colorado-based company offers up to four beer options and four wine selections at each establishment, always seeking a local slant. By offering alcoholic beverages, Noodles & Company enhances the overall dining experience, wins customers in a sluggish economy, and delivers a value unmatched by casual dining, in particular.

“[Serving alcohol] helps us appeal more to casual diners and eliminates the veto vote if a guest is looking for an adult beverage with his meal,” says Noodles & Company spokeswoman Jill Preston. “Our guests also feel financially comfortable ordering a beer or a glass of wine with their meal because they’re spending on average 30 percent less per person than they would at a casual diner.”

Fresher, higher-quality fare

From gourmet and organic to all natural and locally sourced, food at quick serves has upgraded to casual-dining standards. For instance, Corner Bakery Café recently launched a “Stay Local” summer promotion highlighting locally sourced ingredients. Fast-rising Café Rio Mexican Grill prepares fresh food daily, such as hand-rolled tortillas made from scratch and hand-scooped guacamole. Even McDonald’s 2009 debut of Angus Burgers offered a casual-dining burger at a quick-serve price.

“We recognized the opportunity to offer a premium-priced burger at a price that is uniquely McDonald’s,” says Danya Proud, McDonald’s USA spokeswoman. “We are constantly looking to contemporize our menu because we know that customers are looking for more options.”

It’s that eye on opportunity, Giandelone says, that is likely to further woo casual-dining customers.

“When you’re able to offer that premium product at a quick-service price and combine that with the systemwide footprint so many of the quick-service brands have, then you’re talking about a distinct competitive advantage,” he says. 

More comfortable space

With WiFi access and lounge-style seating, more quick serves are offering customers an opportunity to linger, a novel find in casual-dining eateries where turning tables is paramount to business. Furthermore, many quick-service establishments, such as Schlotzsky’s Deli and McDonald’s, updated or remodeled their interiors to enhance the dining-room experience and inject a level of comfort into the eatery that challenges casual dining.

“There’s a customizable experience for consumers at quick-service restaurants that is both appealing and unmatched at casual dining,” Giandelone says.

Enhanced and convenient service

Diners generally prefer tableside service and staff interaction, a territory where casual-dining restaurants have long held an edge. But quick serves infiltrated this, too, and in some cases even bypassed the casual-dining segment.

Dine-in customers at Fish Camp in Huntington Beach, California, for instance, order at the counter before servers bring the food to their table. It’s a service method common at fast-casual outlets, but Fish Camp goes even further by allowing its customers to select the pace of their service—slow, relaxed, or fast. 

Toss in new ordering technologies, such as POS displays consumers can see and faster payment-processing mechanisms, and quick-service outlets gain an even more distinct advantage on speed and accuracy.

“In addition to the lower overall cost of dining at a limited-service restaurant versus a full-service restaurant, it’s about convenience, too,” Van Til says. “The benefit of not having to dedicate time to waiting to be seated, placing your order with a server, or waiting for your bill … plays a role in guest satisfaction.”