Dining Out Review: Fast Casual Restaurants
Fast Casual Dining Segment Shows Explosive Growth Mintel Reports Identifies Segment as One of the Restaurant Industry's Fastest Growing Sectors
Chicago (August 7, 2006)- With a projected outlook of over $11 billion in sales from leading chains for the year, fast casual dining is serving up strong growth within the restaurant industry. A recent Mintel report estimates that total U.S. systemwide sales of leading fast casual chains doubled in the last five years, and the future continues to look bright for the category. The category has been able to successfully blend the quality of family casual with the convenience of fast food, appealing primarily to adults.
"An increased interest in healthy eating, ethnic cuisine, and premium ingredients largely explains the boom in market growth," said Bill Hulkower, analyst for Mintel. "And what we've seen so far is only the beginning. Relative to QSR and full-service, there are still very few fast casual restaurants. As long as they keep updating menus to fit current eating trends, there is substantial room for growth. This category is eating into lunch sales at full-service restaurants, and it's going to pull some sales from QSR. A lot of people just don't have enough lunch time for table service, but don't want to do the QSR drive-thru."
More than half of Mintel survey respondents stated that they think fast casual dining is healthier than fast food restaurants. Close to half also cited that they are willing to spend more to eat healthier. With the trend rapidly shifting from low-carb to a variety of health-based trends such as transfat-free dining, organic and local food, fast casual chains are even better poised for growth than they were two years ago.
Panera substantially leads the fast casual sector in sales. Rapidly growing chains in the category include Zaxby's, Wingstop, Qboda Mexican Grill, Pei Wei, and Panera. Among categories, the ethnic fast casual segment has experienced the fastest growth, relative to the bakery and home meal replacement segments.
"It's not just about health," said Hulkower. "If you're interested in eating healthy, you probably should avoid a 1300-calorie burrito with four grams of salt and 20+ grams of saturated fat. It's also about novelty-- the fresher the concept, the faster it's growing."
Fast casual's increased sales have not gone unnoticed by fast food competition. In response to the category's growth, there is a marked increase in the amount of premium items on quick service restaurant (QSR) menus.
"QSRs are upgrading ingredients and stretching menus to provide ethnic offerings," Hulkower said. "McDonald's added an Asian salad recently that has fast casual written all over it. With fast casual poised for tremendous growth over the next five years, we potentially have a battle brewing between QSRs and fast casual."