Fast-Casual Chains Continue to Outperform Others, Survey Says

By FES Staff -- Foodservice Equipment & Supplies, 6/25/2008 11:56:00 AM

The Top 100 fast-casual chains continued to be the growth vehicle for the limited-service restaurant industry in 2007, and outperformed the restaurant industry as a whole, according to a study released by Chicago-based Technomic. The study showed that fast-casual chains posted sales growth of 13.3 percent, compared to just 5.3 percent for the overall limited-service segment and 5 percent for the restaurant industry.

In terms of unit growth, fast-casual led the way there, too, with 9.5 percent compared to 2.6 percent each for limited-service operators and the overall restaurant industry, according to Technomic.

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, according to Technomic, which feels the results are indicative of an industry segment that demonstrates solid performance and diversity across several menu categories. Supporting that line of thought, Technomic listed the following breakdown of menu composition within the top 100 fast-casual chains:

Other Sandwich: 20 percent
• Mexican: 19 percent
• Bakery Café: 18 percent
• Pizza/Italian: 12 percent
• Asian: 9 percent
• Chicken: 9 percent
• Hamburger: 7 percent
• Specialty: 6 percent

The reason fast-casual restaurants remain resilient despite a challenging economic climate, according to Technomic, is due to the fact they occupy a niche that allows for broad-based appeal. For example, fast-casual consumers have an opportunity to “trade down” to lower-priced yet high-quality fresh food, while quick-service customers have 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, according to the study. However, fast-casual’s success has attracted the attention of both full-service restaurants and quick-service chains.

“New chains are constantly emerging — some similar to concepts already out there, while others are spin-offs of their full-service counterparts,” says Darren Tristano, Technomic executive vice president of information services. “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.”

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, according to the study.

Click here for more information about the 2008 Top 100 Fast-Casual Restaurant Report.