A lot has been made about the fast-casual segment’s deterioration. And there’s no question this coming decade carries a different feel than the previous one. According to industry consultant Pentallect Inc., the segment reported sales growth between 10–11 percent from 2010–2015. It then slowed to 8 percent before falling to 6–7 percent.

Yet when you remove the category spotlight, the reality is a broader issue that started to tick once the Great Recession faded. The NPD Group reported in July that fast casual was the only corner of foodservice to grow its traffic in the last five years. Units expanded at a compounded annual growth rate of 7 percent. In 2013, there were 19,231 fast-casual restaurants in America. By 2017, per NPD’s Fall 2017 ReCount restaurant census, there were 25,118 locations. By the following year, the number lifted to 25,312—up one percent, year-over-year. Traffic, meanwhile, climbed 3 percent in fast casual as total U.S. foodservice transactions remained flat.

That mirrored the previous year. In the calendar run ending May 2018, total restaurant visits were flat while fast casual traffic lifted 5 percent.

Another interesting dynamic is that fast casual is far, far more saturated than it was a decade ago, which ushered in an era of aggressive concept differentiation and a rash of bankruptcies. Yet the biggest players in quick service (McDonald’s, Wendy’s, Taco Bell, etc.) still account for 75 percent of all restaurant traffic. Quick-service retail (prepared foods, CPG, and so forth) take up 17 percent. Fast casual mixes just 8 percent of total restaurant visits, per NPD, despite claims the segment is bursting at the creative seams.

The National Restaurant Association estimated the entire counter-service industry would generate $246.7 billion in food and beverage sales this year, or 3.2 percent higher than sales predictions from the previous year.

All that isn’t to say, however, the fast-casual landscape is ripe for growth necessarily. It’s a more controlled arena heading into 2020. When growth was double-digits 10 years ago, fast casuals—by just being fast casual—were novel enough to produce headlines by simply opening. Crowds would form and products would fly off the counter. And the more trend-centric the concept the better.

Fast casual has witnessed a 7 percent hike in off-premises as a percentage of total sales since 2016.

You could credit this, in many ways, to the real-estate gaps exposed by 2008’s economic downturn. Barriers to entry vanished for operators. As e-commerce crippled retail outlets, restaurants boomed, especially new brands led by entrepreneurial-minded owners able to raise capital. Rent was low. Investor interest was high. Consumer spending fit the offering—restaurants offered a more attractive and budget-friendly outlet for consumers to indulge on experience than past options, like vacations.

READ MORE: Are restaurants headed for the same course correction as retail?

To dress it down, the Great Recession’s retail correction eased the start-up cost dynamic of restaurants. And no category flooded into the opportunity more than fast casual. As Sisha Ortúzar, co-founder of ‘wichcraft, a brand fueled by “Top Chef” head judge and renowned restaurateur Tom Colicchio, told Partners + Napier, “everything changed” in New York City as landlords were suddenly “going out of their way to get tenants and rents definitely adjusted.”

The result: restaurants started to grow at twice the rate of the population, as The Wall Street Journal pointed out. From 1970–2015, the same phenomenon unfolded for malls.

So, what’s the full picture for fast casual? It’s simply a harder space to play in these days. But that doesn’t mean it’s doomed. Far from it.

You just can’t count on the tailwinds and merits of simply being a “fast-casual restaurant” anymore. Brands that will survive and grow will offer a stronger differentiator than competitors, and have the operational chops and technology to bring that vision to life. That’s one of the key areas struggling chains faltered in recent years—having a great concept and food but systems that couldn’t support growth. That or stumbling along the real-estate road to expansion. Many early fast-casual adopters enjoyed long lines and heavy traffic, and then slipped when the unit count expanded. Perhaps because they couldn’t oversee the operation from start to finish at every store, but also because site selection blocked progress. A booming concept in Chicago might not work in Milwaukee. And then those low rents mentioned before? That’s gone by the wayside as wage rates exploded under a low-unemployment economy.

Expect to see more shuffling and consolidation (think Cava and Zoes, Lemonade and Modern Market Eatery) as successful brands find winning formulas to growth. There’s less margin for error for contenders on the fringe. Providing a compelling differentiator might not come down to food, either. Brands can separate themselves through their technology platforms, their food, or their experience. “The world doesn’t need another premium submarine sandwich chain. It just doesn’t. We’ve already got plenty of them,” Gary Stibel, founder and CEO of the New England Consulting Group, told QSR earlier in the year.

A Burrito Bowl At Chipotle

Let’s look deeper

TDn2K’s “State of the Fast Casual Segment” report broke down some key elements of this debate.


“Share of wallet” is a metric tracked in Consumer Intelligence by TDn2K. It shows where guests spend their money when they aren’t at your restaurant.

Fast casual, per TDn2K’s findings, experienced a drop in the average share of wallet across each age demographic this past year. The largest fall occurred in the 18–24 segment, with an average of negative 0.09 percent shifting spend elsewhere. The smallest declines were in the 35–44, 45–54, and 65 and over age groups.

On a side note, fine dining had the largest growth in average share of wallet across age groups. It’s outperforming other segments based on same-store sales growth, followed by family dining.

TDn2K also pointed out that third-party delivery providers received the highest average change in the share of wallet across all demographics.

What does this mean? Fast-casual brands are not necessarily losing out on sales; they are simply take place through other providers.

How fast casual compares

Here’s a look at comp sales and traffic trends.

And how it splits up.

Same-store sales for fast casual remains on par with the industry. Even though comps have tracked positive for most of the last 24 months, they are trending in the wrong direction (just like the overall restaurant field). During September of 2019, same-store sales for all chains reached an actual year-over-year contraction point. In the third quarter—for the first time in two years—growth turned negative with same store sales falling 0.4 percent. The gradual slowdown we’ve seen this fiscal calendar slipped into actual comparable contraction.

This movement unfolded as checks rose, too. For fast casual and the industry overall, per person and per ticket averages have steadily increased.

Compared to the rest of the industry, fast casual experienced a huge jump in delivery sales, though. The monthly average from September 2017 through August 2018 compared to September 2018 through August 2019 changed from 10.3 percent to 28.46 percent. The industry as a whole grew to 7.4 percent in delivery sales.

Fast casual also witnessed a 7 percent hike in off-premises as a percentage of total sales since 2016 (this includes use of third-party delivery providers).

By now, this is a pretty standard reality for quick-serves of all sizes, but those with a clear strategy in regard to how they translate the brand experience through to-go and delivery options will have an edge. That’s the undeniable effect of a consumer set fueled by convenience and frictionless ordering.

Market share, and how it’s changing

This is what 2018 looked like, according to TDn2K’s Market Share and Industry Growth Report. The numbers are pretty close to NPD’s.

  • Casual dining: 20.17 percent
  • Family dining: 4.49 percent
  • Fast casual: 10.82 percent
  • Fine dining: 0.93 percent
  • Quick service: 60.77 percent
  • Upscale casual: 2.83 percent


  • Casual dining: 19.77 percent
  • Family dining: 4.43 percent
  • Fast casual: 11 percent
  • Fine dining: 0.93 percent
  • Quick service: 61.07 percent
  • Upscale casual: 2.79 percent

The only two segments that experienced an increase in market share compared to the previous year? Quick service and fast casual.

Some other stats

Average turnover for the fast-casual segment rose 0.8 percent for the 12-month period ending in Q2 2019, year-over-year, TDn2K said.

Turnover for fast casuals in the 25th percentile

  • Management: 17.8 percent
  • Non-management: 57.8 percent

In the 50th percentile:

  • Management: 22.5 percent
  • Non-management: 73.8 percent

In the 75th percentile:

  • Management: 29.4 percent
  • Non-management: 81.3 percent

For those three categories, employees per unit go from 20 to 30 to 35, respectively.

Additionally, TDn2K found that sales per labor hour (total sales divided by total labor hours) came in at $54 for fast-casual chains.

Median salaries for kitchen managers clocked at $38,093. For GMs, it was $60,791.

Average hourly wage by position in Q2:

  • Cashier: $11.41
  • Dishwasher: $12.02
  • Line cook: $12.78
  • Shift leader: $14.41
  • Team member/crew: $11.33

As TDn2K has stressed before, winning brands begin their labor efforts at the GM level. Managers look for more work-life balance, training, and career development from restaurant brands. And that trickles down throughout the entire staff.

How guests are reacting

It all relates. Fast casuals that solve turnover and traffic woes are also winning in online guest sentiment, according to TDn2K. “It is becoming more obvious that food and beverage are table stakes and guests are expecting a superior service experience that will drive their intent to return,” the company said.

Average net sentiment by attribute 2019 year to date:

  • Food: 18.52 percent
  • Beverage: 13.49 percent
  • Ambiance: 16.66 percent
  • Intent to return: 48.78 percent
  • Service: 10.22 percent
  • Value: Negative 4.84 percent

Fast casual average restaurant ratings:

  • Tripadvisor: 3.73
  • Google: 3.88
  • Facebook: 3.88
  • Yelp: 2.85
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