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One trend that emerged in 2013 and will remain a restaurant industry factor in 2014 is casual dining concepts creating fast-casual prototypes in order stop losing share of stomach to their rapidly growing competitors. A variety of attributes help define fast-casual’s rapid growth and broad-based appeal, including the perception of providing good and wholesome food, fast service, reasonable prices and an environment that’s comfortable and more upscale than fast food provides. Some foodservice industry experts would also suggest that the fact customers are not obligated to leave a tip serves as another advantage fast-casual has over casual dining.
Once again, Chipotle reported stellar results,and other fast-casual concepts continue to prosper in these still somewhat tough economic times, while their peers from other segments keep struggling a bit.
For larger, full-service restaurant concepts with ample resources, the idea of entering the fast-casual space seems like a pretty straightforward one. In reality, though, entering the fast-casual market can be an exercise in futility if not handled properly.
Just because a casual dining concept creates a fast-casual design doesn’t mean the new approach will succeed and increase company profits. When migrating concepts to the fast-casual space, careful analysis, preparation and execution remain critical steps in order to achieve the concept’s success.
All brand managers need to have a vision for what they want the concept to be and understand their new competitive set. They have to be able to clearly articulate their “differentiating proposition” in the market.
When launching a fast-casual concept, the smaller the investment the better. By that I mean, try to make the back-of-house as small as possible and focus the concept’s efforts on the area we now refer to as middle of the house, where production happens. Indeed, one common mistake design teams make when developing new fast-casual concepts is adopting an attitude of “if you build it, they will come.” In doing so, they often fail to take into consideration how much capital it requires to bring a concept to market.
Another factor that can doom many emerging fast-casual concepts in the beginning is understanding the cost of labor necessary to execute the brand promise. Many believe the more scratch cooking a concept does, the more credit consumers will give them for quality. The reality is that cooking entirely from scratch not only adds labor, but can also add inconsistencies in what the customers get in different locations. There’s a huge difference between made-to-order and made from scratch. Brands stand for many things in consumer’s minds and consistency of product and execution is one of them.
What daypart the concept serves will also impact its ability to be successful in the fast-casual space. A fast-casual concept that can drive volume in two dayparts, for example, has a much greater chance of winning in the marketplace than a brand that only serves one daypart. If a concept can deliver volume during three dayparts, even better. Don’t forget to include modes of service the concept can serve in this mix also, including catering. Food that can travel and fill this niche is a beautiful thing.
At the end of the day, one of the primary metrics of a successful concept is the sales to investment ratio. A concept that pushes three to one in this metric is very likely succeeding in the marketplace already, even with low average yearly sales. If you don’t believe this, consider that the largest restaurant concept in the world does not have huge yearly sales, but it does have very low capital and operating costs. There are other smaller local concepts that are winning in their marketplace already. One such concept is Giardino Gourmet Salads, a small concept in the South Florida area. One key to their success is keeping the capital and operating investment low.
So let’s do a quick review on some of the successful design criteria for fast-casual concepts:
If you hit all checks in this table, then what are you waiting for? Get the concept built.