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Fast Casual Only Restaurant Sector to Grow Traffic

McAlister's Deli fast casual
Fast casual McAlister Deli. Photo/bmm

CHICAGO — Fast casual restaurants continue to be a bright spot for the foodservice industry, which has yet to fully recover from the Great Recession. Fast casual restaurant visits by consumers are up 8 percent in 2013 over prior year, according to foodservice researcher The NPD Group. That robust growth compares nicely to essentially no growth for the total restaurant industry and a slightly contracting quick service segment.

Spending at fast casual restaurants increased by 10 percent last year compared to two percent growth at total restaurants.

Fast casual chains, which are perceived to have enhanced service and higher quality food than traditional quick service restaurants (QSRs), have a higher average check per person compared to the check size of a traditional quick service restaurant visit. Panera Bread, McAlister Deli, Five Guys Burgers and Fries, and others are counted among this group. They serve food quickly but guests often casually dine within. But even here, fast casual is changing. Panera and others are taking a hint from fast food and are developing drive-thru service.

Chart: Blue MauMau, Data: NPD

Quick service leaders can see the sizzle in fast casual. Some experiment with new franchised concepts and spin offs that they hope will ride the growing tide. For example, fast food chain Jack in the Box acquired fast casual Mexican grill concept Qdoba back in 2003. It now has over 600 restaurants in 44 states.

Fast casual has sizzled while family dining has long cooled. Franchise owners in the big national brands of Bonanza, Bennigans, Shoney's, Perkins Restaurant & Bakery, Steak and Ale and other legacy chains have greatly dwindled, declared bankruptcy or disappeared. Remember Sambo's? Or the thousand company-owned and franchised Howard Johnson's? Out of the ebbing tide, a few casual dining concepts have managed to increase. For example, 24 hour giants Denny's and IHOP have managed to reinvent themselves as they compete with one another.

John Gordon, restaurant unit analyst for Pacific Management Consulting Group, comments that even casual diners are experimenting with expanding into fast casual. "Denny's is working a fast casual sub-concept," recalls Gordon of the presentation to analysts from the casual dining chain's CEO at last month's ICR Xchange. He thinks a lot of the segment's growth comes from strong chains like Panera Bread, Chipotle Mexican Grill and Five Guys Burgers and Fries. Many start-up fast casual chains, such as a newer crop of better burger concepts, are seeing mixed results. They look likely to come and go.

Guest check sizes at fast casual restaurants on average were $7.40 last year, higher than the average quick service restaurant visit check of $5.30, but still much lower than the average full service restaurant visit check of $13.66, according to NPD's Crest research, which tracks daily how consumers use restaurants and other foodservice outlets.

"Overall, restaurant customers are trading down, foregoing some of their visits to full service places while increasing the number of visits made to fast casual restaurants," says Bonnie Riggs, NPD restaurant industry analyst. "Fast casual concepts are capturing market traffic share by meeting consumers' expectations, while midscale and casual dining places continue to lose share."

Unit expansion was a major contributor to the fast casual restaurant category's growth. There are now 16,215 fast casual chain units in the U.S., an increase of 6 percent (903), from last year according to NPD's Fall 2013 restaurant census, ReCount.

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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email