2020 Future of Fast Casual Report: Tacos & Seafood

    These two categories have plenty of runway ahead of them for massive growth. Here's how some of the players are planning for long-term success.

    Chronic Tacos
    Chronic Tacos
    In Chronic’s case, inspiration is sourced from classic California.

    Tacos: All about personality

    Tacos are more of a blank canvas for culinary exploration than perhaps any other food, making the fast-casual taco scene one that runs the gamut in terms of taste and inspiration.

    “The taco scene is growing, and we’re seeing a lot of creativity in the market—the flavors and fusion that can take place with a taco are evolving,” says Chronic Tacos CEO Michael Mohammed. “In each brand you can find a different offering, and the end product can vary from concept to concept.”

    In Chronic’s case, inspiration is sourced from classic California taquerias. Chronic tacos are updated takes on traditional fare and feature a protein (chicken, shrimp, fish, carnitas, veggie, grass-fed steak, al pastor, or Beyond meat), layers of flavorful rice and beans, and fresh toppings like white queso, cilantro, and cabbage.

    Compare this more traditional take with the handhelds at Torchy’s Tacos, an Austin-based chain famous for its “damn good” offerings. Torchy’s serves irreverently named, unique ingredient mixes like the Tipsy Chick, which includes marinated and grilled chicken breast, spinach, grilled corn, green chilies, chipotle sauce, and a side of bacon bourbon marmalade.

    The range of flavor options demonstrated by a Chronic-Torchy’s comparison widens when you take a look at other brands in the space—for instance, Atlanta-based Taqueria del Sol specializes in Southern-Mexican-Southwestern fusion, and Fuzzy’s out of Fort Worth, Texas, offers Baja-style flavors.

    Thanks to this variety, having multiple taco shops in town isn’t necessarily overkill. Instead, the different experiences offered from shop to shop create a market that allows a number of concepts to thrive simultaneously. “If we look at the landscape, there are lots of regional players that have done a really good job with different versions of tacos,” Torchy’s CEO G.J. Hart says. “And they’re certainly competitors for share of stomach for us. But we’re more focused on going into a market and presenting Torchy’s as a unique and different craft-casual experience. We’re going to have competition, but we’re not reluctant to go into a market as a result of that.”

    And there are plenty of markets still remaining for Torchy’s and other taco chains to explore. While taco shops experienced growth rates of almost 10 percent in 2019, the category still occupies only around 15 percent of the greater Mexican fast casual segment.

    Of course, this segment includes burrito heavy hitters like Chipotle, which could pose a daunting competitor for taco fast casuals. But while those in search of burritos are often looking for filling portions and total customization, taco customers are in search of an experience—one where a trio of handhelds can serve a whole world of complex, diverse flavors.

    “Burritos and tacos are very different types of experiences. We’re in the elevated street taco business, and we’re not confused about that—this is a space that’s fun, entertaining, and experiential,” Hart says.

    Tristano’s Take

    "Although more niche, taco shop specialization is providing great expansion opportunity as consumers look for signature style and flavor. A focus on tacos provides broader ingredients, flavors, and sauces, giving consumers a greater variety of items to enhance their dining experience."

    How often do you plan to visit fast casuals within this category?

    Mexican - Taco Shop

     
    Same
    54%
    More Frequently
    20%
    Less Frequently
    15%
    Not Applicable
    11%

    Seafood - Fish/Fried Fish

     
    Same
    48%
    More Frequently
    20%
    Not Applicable
    18%
    Less Frequently
    14%

    Seafood - Poke

     
    Same
    38%
    Not Applicable
    32%
    Less Frequently
    18%
    More Frequently
    12%

    Seafood - Lobster/Crab/Shrimp

     
    Same
    45%
    Not Applicable
    22%
    More Frequently
    17%
    Less Frequently
    16%

    Seafood: Ready to step into the spotlight

    Going out for seafood no longer means choosing between a fried-fish-heavy seafood shack or a white tablecloth dinner. A new crop of seafood fast casuals has emerged, and their potential is promising—in 2019, sales in this category grew by almost 30 percent, and more growth is on the horizon.

    Take modern seafood shack Slapfish. The 11-unit chain serves a wide range of fish within a number of cuisines—lobster taquitos, New England clam chowder, and shrimp ceviche are all on the menu. The offerings fit any combination of available fish and eclipse any chance of a veto vote (salads and fresh, seasonal sautéed veggies are also available), making the brand versatile and scalable.

    “We wanted to create a vehicle through which we could pepper in a lot of different, changing fish,” founder and executive chef Andrew Gruel says. “For a lot of people, seafood is a once-a-month or every-other-week thing, but health data shows that we should be eating fish two to three times per week. So our menu caters to that two to three times per week.”

    As health-forward diets gain popularity and environmental concerns increase, that two to three times per week is becoming a reality for more Americans. Younger generations of consumers are more accepting toward raw fish formats (the rise of sushi and poke speak to this open-mindedness) and seafood is also a worthy competitor for less health- and environmentally conscious proteins like beef.

    The cuisine has gone from niche to an up-and-coming threat to mainstream categories. The segment has room to grow, and in all markets.

    Stephan Harman cofounded FUSIAN—a custom sushi chain that now has 10 units—in Ohio with friends Zach and Josh Weprin. The menu fills the space between high-end and grocery-store sushi, offering classic rolls as well as more familiar options featuring chicken, steak, and even peanut butter and jelly. Bowls and salads are also on the menu, striking a balance between the raw, health-forward items that millennials and Gen Z’s crave and accessibility for less-adventurous guests.

    “We made a name for ourselves as a Midwest sushi chain, and we think there’s an opportunity to expand our customizable menu into other markets,” Harman says. “We have core menu items, but customers can also build their own items, and I think people have really rallied around that customizability and blend.”

    Another seafood-specific perk is the category’s easy scalability. Both Slapfish and FUSIAN employ simpler equipment than the typical burger or chicken unit—Slapfish uses a simple grill for cooking, and Harman says FUSIAN’s back-of-house setup also falls on the lighter side.

    Tristano’s Take

    "Perhaps the most under-developed category of fast casual, seafood continues to find strong contenders to develop significant footprints in the U.S. Growth in this category has shifted from fried traditional food to raw fish, more specifically Hawaiian poke. It appears the stigma toward raw fish has shifted with the younger millennial generation of consumers, as demand is very high for items."