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Fast-casual restaurants provide fast service and fresh, high-quality food in upscale settings. The top 100 chains totaled $14.8 billion in sales, accounting for most of the $16 to $17 billion the entire fast-casual industry grossed in 2007, an industry that demonstrates solid performance and diversity across several menu categories.
The menu composition within the top 100 fast-casual chains study considered eight categories. The other sandwich category took 20 percent of the market share, Mexican took 19 percent, bakery café took 18 percent, and pizza/Italian took 12 percent. Asian took 9 percent of the market share, chicken took 9 percent, and hamburger took 7 percent while specialty took 6 percent.
Fast-casual restaurants occupy a niche that gives casual-dining consumers an opportunity to “trade down” to lower-priced yet high-quality fresh food, and allow quick-service customers a way to “trade up” to a more upscale “third place” environment that offers affordable food quickly at a cost that is usually only about $2 to $4 more than typical quick-service venues. However, their success has attracted the attention of both full-service restaurants and quick-service chains.
“Competition is getting tougher within this segment,” says Darren Tristano, executive vice president of Technomic Information Services. “New chains are constantly emerging—some similar to concepts already out there, while others are spin-offs of their full-service counterparts. Meanwhile, quick-service chains are trying to lure customers back by revamping their offerings and sometimes their décor to compete with fast-casual concepts. To continue competing successfully, fast-casual chains must align themselves even more closely with the needs of their target customers.”
The report identifies and analyzes four key characteristics that will have an ongoing influence on fast-casual menus and continuing growth opportunities: 1) exceptional flavor and spice profiles; 2) high-quality ingredients; 3) regional ethnic cuisines; and, 4) fresh and healthy inspirations. Select findings include:
• Fast-casual chains are trying to drive revenue in slower-traffic periods, such as breakfast, dinner, and in-between snack periods, by introducing new menu items, adding or enhancing existing catering programs, and by offering Wi-Fi and adult beverages to attract mobile workers and social occasions.
• Panera Bread remained the highest grossing fast-casual chain with $2.2 billion in estimated sales in 2007, as well as the chain with the largest sales and unit growth in terms of actual dollars ($336.9 million) and units (140 new stores). It also leads the bakery café segment. Second- and third-place chains were Chipotle Mexican Grill (Mexican segment) with an estimated $1.1 billion and Panda Express (Asian segment) with an estimated $1.0 billion in sales in 2007.