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What are the growth projections for fast casual in the next five years?
Fast casual is expected to grow at about 3-5% in nominal terms per year over the next five years. By 2014, fast casual is expected to reach about $28.4 billion, a 24% increase from 2010 sales of $23 billion.
How has fast casual been accepted by college-aged consumers?
It does appear that college-aged consumers have accepted fast casual, though more on a brand-to-brand basis, rather than the entire segment. For restaurants positioned with menus that offer heartier fare, especially ethnic fare, college-aged consumers are outpacing older consumers in their usage. Even with the higher costs associated with fast casual, there is still growing usage among this group.
Do food costs run higher in fast-casual restaurants?
While we don’t have data that would point us in any one direction, intuitively it would follow that fast-casual ingredient costs are higher than in other restaurant segments. Given the segment’s “fresh” positioning and some chains following a “no freezer” positioning, these fresher ingredients are going to be higher than those shelf-stable or frozen ingredients.
How do fast-casual restaurants compare to other segments when it comes to beverage sales? What about desserts?
Fast casual lags in these two areas compared with quick service and casual dining. Regarding beverage options, fast casual still has room to add to its beverage menu, including beverages that double as desserts like shakes, smoothies and frozen coffee blends. Beverages are also behind casual dining, which is more likely to have mixed drinks, both alcoholic and non-alcoholic. For dessert, fast casual lags casual dining. This is reflective of consumer usage of the segment, as customers are less likely to linger at fast casual, especially at lunch.
What kind of markets do fast-casual restaurants perform better in?
Given the emphasis on lunch as a major daypart, fast casual is going to perform better in densely populated markets, such as urban markets or suburban centers.
How do fast-casual operators drive traffic in off peak periods?
For those off-peak hours, snack sized and priced options offer an opportunity for fast-casual operators to drive traffic. These lower priced options provide a good quick hit meal option and also underscore the importance of being in an operating area where consumers can easily access the restaurant, like an urban center.