Thinking of Buying a Fast-Casual Franchise? Read this report first.
QSR Feature
Confounded by Fast-Casual

Take, as another example, the DQ Grill & Chill concept, which was launched in 2001 and today accounts for some 10 percent of the Dairy Queen chain. “Unless we start to break out the Grill & Chill from the rest of the Dairy Queen chain [for the fast-casual rankings], Dairy Queen can’t fall under fast-casual,” Tristano says. “I think a concept would have to be at least more than 50 percent converted.”

Another confounding factor is the casual-dining companies that have created brand extensions to reach into quick-serve territory—concepts such as California Pizza Kitchen’s CPK ASAP and Don Pablo’s Pablos’s Fajita Grill. Under which label should those units fall? Sometimes a factor as simple as accounting calls the play. For Yum! Brands, which reports blended results for its three concepts, Technomic ended up lumping Pizza Hut in with its sister companies Taco Bell and KFC, even though Pizza Hut provides traditional table service.

As he talks about the Pizza Hut designation, Tristano sighs faintly. “At what point,” he asks, “does it all blur so much that you just put it back into limited [quick] service and forget about it?”

The Glow of Fast-Casual

To forget about it would be to dismiss the intense cachet that the fast-casual label carries today. The segment enjoys the glow of double-digit annual sales growth, outstripping quick-service and casual dining in performance. Fast-casual menus tout premium ingredients and taste profiles, which translate to consumers as a healthier buy, worth the slightly higher price point. In a Mintel survey, the majority of respondents said they felt food at fast-casual restaurants was healthier than quick-serve food.

Those positive attributes can make fast-casual concepts an easier sell to potential franchisees. Franchise Gator has a “Quick Casual” category, including such concepts as California Tortilla, which describes itself as “a fast growing, fast-casual Mexican restaurant,” and Green Tango, a salad concept that says it “is part of the explosion of fast-casual restaurants in the United States.”

The fast-casual arena is even attracting investments from celebrity chefs, something that historically occurred more often in casual dining. Recently, household names like Bobby Flay, Rick Bayless, and Wolfgang Puck have invested in fast-casual operations, attracted to the blend of menu flexibility and economics the segment can offer. Fast-casual menus are fitting places to tout all-natural, locally sourced, and organic ingredients, and to do so with a verbal flourish—after all, Panera builds its Smokehouse Turkey sandwich on “artisan Three-Cheese Bread.” Fast-casual menus also feature a wider, more daring range of ethnic fare, which gives chefs and consumers the opportunity to try new tastes.

Celebrity chefs appreciate the latitude within the segment, says Morris at Mintel International, which named the incursion of celebrity chefs into fast-casual one of its “Eight for ’08” trends. “It’s not an entirely chain-driven segment,” Morris says. “Whereas it’s very hard for large conglomerates to experiment [with menus] on a daily basis, independents can do that. We’re seeing celebrity chefs gravitate to lower-cost formats, bringing things that draw from the fine-dining realm. There’s more flexibility, yet it’s still about ambience and price point.” And once the larger chains see nascent trends take hold among consumers, they’re more likely to adopt them, Morris adds, thus the appearance of adventurous dishes like McDonald’s Asian Chicken Salad.

On the Ground Today

The fast-casual label and its intense cachet are the products of an evolution that began in the early 1990s and picked up speed around 1997. The earliest terms describing the intersection of quick-service and casual dining included “premium fast-serve,” used to describe early fast-casual concepts like the now defunct Wrap Works. Around 1997, Technomic coined the term “quick casual” based on trends the company observed during a major study of home-meal replacement and its morphing into convenient meal solutions, Tristano says. At that time, he says, the firm’s quick-casual term referred to a casual-dining–style setting, with quick-serve–style food. For a while, the terms co-existed, until the firm adopted “fast-casual” because it was widely accepted.

Today the fast-casual label represents a brass ring to many concepts. As with others whose work involves categorizing, labeling, and ranking the restaurant world, Morris and Tristano say they frequently field calls and emails from executives of companies that want to be included on the firms’ listings of fast-casual concepts and trends.

Page 1 | 2 | 3 | 4 | Next