It’s no secret that fast casual has experienced a remarkable amount of growth, attracting an increasing number of players to the segment. So what’s next for this powerhouse segment within the industry? Well, if the fast-casual sector has a natural growth limit, we’re not seeing it yet, but what we do see are some challenges emerging for fast-casual brands as they continue to battle for consumer spend.
Of the total $466 billion in sales the restaurant industry recorded in 2014, fast casual’s portion was small at about 8%, or $39 billion, but the segment grew at a rate of 13%, more than three times the 3.8% growth rate by the industry overall, according to Technomic’s latest industry research.
In Technomic’s Top 150 Fast Casual Chain Restaurant Report, there are a number of insights gleaned from emerging trends and how the top players—with sales at $32 billion, an increase of 13.2%—in the segment have performed.
Here are some emerging opportunities/challenges highlighted in the report:
- Fast-casual chains must defend their points of differentiation. Seeing the success in fast casual, full-service restaurants are experimenting with spinoffs and alternate formats, while quick-service chains are upgrading menu items and adding customizable options to compete.
- New menu niches and foreign chains will grow. Consumers understand the basics of fast casual’s “made-for-you” format and will be searching for novel tastes in Mediterranean and salad brands and concepts from abroad such as Nando’s and Caffébene.
- Investments in technology and unit upgrades will begin to pay off. Fast-casual restaurants have been ahead of the curve when it comes to technology upgrades—from mobile ordering and payment apps to experiments with in-store kiosk ordering. Technology-enabled delivery may be the new frontier.