Washington Restaurant Market Watch: A fast casual future

Washington Restaurant Market Watch: A fast casual future https://wahospitality.org/wp-content/uploads/2014/06/fastcasual500-508x198.jpg

By Paul Schlienz

Fast casual restaurants are experience explosive growth. The fast casual category, indeed, now accounts for 5 percent of all restaurant traffic, a jump from 1 percent in 2000.

“We noticed this incredible thing at the start of the recession,” Bonnie Riggs, an industry analyst with NPD, a research firm that has studied the fast casual concept’s growth, told the Washington Post.” Traffic in the restaurant industry was negative for two years in a row, which we had never seen before. Quick service was flat; full service was flat. But fast casual was growing in the double digits even during the height of the recession.”

And there is no end in sight to this upward trend.

Fast casual is distinguished from traditional quick service or fast food restaurants by its prices of $9 to $13 dollars per receipt versus $5 in fast food restaurants. Fast casual restaurants also tend to earn less than 50 percent of their business from full service sit down meals. Beyond those qualifiers, fast casual restaurants are similar to casual dining establishments, like Applebee’s.

According to Technomic, a research firm that recently studied fast casual restaurants, the concept is defined by characteristics including the quality of the food, better ingredients, wholesome food, perceived freshness, first-rate decor, fair pricing, fast service, friendly employees, flexible menus, and a full view of how the food is prepared.

“What we saw early on with fast casual was mainly an emphasis on offering a better product,” Darren  Tristano, Technomic’s executive vice president, told the Washington Post. “It was the price point, but also the food quality, the ingredients, the experience.”

Apparently, this formula is working well because Americans spent more than $21 billion at fast casual restaurants during 2014, according to the Euromonitor research firm.

Fueling much of the growth of fast casual establishments is the Millennial generation, born between approximately 1982 and 2000. This demographic makes up the largest group of fast casual customers. The reason fast casual resonates with this generation is because Millennials, in large part, find themselves strapped for time, but are also less willing than older generations to eat fast food, which they see as unhealthy. With Millennials so wedded to the fast casual concept, NPD estimates that fast casual restaurants will experience double digit growth through 2022. In contrast, NPD predicts the restaurant industry’s other sectors will grow by rates of approximately half a percentage point.

While Tristano feels the fast casual better burger segment has reached a point of saturation, he sees tremendous growth potential for fast casual concepts including pizza, chicken, Asian, Mexican, bakery-cafe, seafood and health-focused.

“What consumers are looking for is the best value proposition,” Riggs said. “And value doesn’t mean the cheapest price.”

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