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What is the biggest threat to fast casual’s growth?
Even with its high quality positioning, fast casual is vulnerable in price. Quick service can clearly undercut fast casual in pricing, and even casual dining has lowered its prices to more aggressively compete with fast casual. For many of these restaurants outside of fast casual, there is still an opportunity to stress quality at a low price.
Are there still a lot of new concepts entering the fast-casual marketplace?
To date the fast-casual segment has been largely defined by two types of restaurants, the bakery café and the ethnic restaurant. There are entire categories that this segment can penetrate and we have recently seen a number of entrants try to define and grab the leadership position in fast-casual burger. Companies like Smashburger, Elevation Burger and Five Guys Burgers are positioning themselves as the better burger players, much in the same way Chipotle was the better burrito and Panera was the better sandwich.
What do fast-casual operators need to do in order to keep growing their businesses?
Operators need to be keenly aware that competition is not limited to just those restaurants operating in their segment. Fast casual is facing competition from quick serve and casual dining. To that end expansion of menu items to include things like a more comprehensive beverage menu will help operators in this segment better compete against these two segments.
Lunch is fast casual’s biggest daypart. Does the category have more growth potential at breakfast or dinner? What are operators doing in that regard?
For some fast-casual chains, breakfast is going to have more appeal than dinner, and vice versa for others. Certainly, the bakery café concepts have menus that are more aligned for breakfast, with menus that place an emphasis on coffee and baked goods. Other fast-casual concepts, especially those in ethnic and traditional segments may be more likely to play at dinner where the menu is more appropriate. In addition to these traditional dayparts, operators are also adding ‘snackable’ items that are low priced and smaller than traditional items and appropriate for mid-morning or late afternoon snacking occasions.
Can fast casual expand its customer base to include kids without alienating adults?
Compared to other segments, fast casual has traditionally had an underdeveloped kids’ menu. Part of the appeal of fast casual to adults is that it is a “grown up” version of fast food. And for those fast-casual chains looking to increase their appeal through a kids’ menu, care has to be taken to not go a traditional kids’ menu approach. That means no cartoon characters and a kids’ menu that reflects adult flavor sensibilities.
Is the fast-casual segment marketed differently than other segments?
Fast casual is positioned through its fresh food and high quality ingredient positioning. When competing against fast food, this quality positioning is higher quality at a just slightly higher price point, while when positioned against casual dining, that higher quality claim still holds, but with a lower price.
Additionally, fast-casual brands have been more receptive to catering as a secondary driver of sales. Their menus, especially those in bakery café, often have a wide range of appeal for company meetings and other catering events.