Specialty Segments to Supercharge Fast Casual’s Momentum

The fast-casual segment has had a remarkable run of sales and unit growth the past 10 years, enjoying broad success in familiar menu categories like Mexican, sandwiches and burgers. But the salad days for specialty fast-casual brands and their burgeoning segments—like build-your-own salad, Mediterranean, pizza and barbecue—are just beginning, and their development likely will sustain the entire sector’s momentum for years to come.

According to Technomic projections, the fast-casual industry will continue to grow sales at a much faster pace than quick service or casual dining over the next five years, as it has since the last recession. However, this time around, the underserved specialty segments within fast casual will lead the sector’s growth. The Mediterranean fast-casual niche is expected to produce a five-year compound annual growth rate of 33% in annual sales through 2019, just ahead of the 30% CAGR projected for health-focused brands. The pizza subsegment is expected to log a five-year CAGR of 23% through 2019, followed by 21% for barbecue and 17% for salad.

The two clusters projected to grow the fastest, Mediterranean and health-focused, are primed to leverage fast casual’s higher perceptions of freshness and ingredient quality, which have contributed to growth in major urban markets for several chains. Publicly traded Zoës Kitchen stands out in fast-casual Mediterranean as the largest player, but there are regional brands with one to two dozen locations making inroads in several markets, including Little Greek and Roti.

With some fast-casual chains, the appeal to health-focused consumers couldn’t be more overt, as with Protein Bar or Muscle Maker Grill. The name Just Salad lacks subtlety as well, but that New York-based brand and similar concepts like Chop’t have a menu offering and service style that also appeal to the workday lunch crowd in big cities. In both specialty niches, brands have made large efforts to derive sales from catering from the outset.

Fast-casual barbecue is poised to go on a growth spurt the way the “better burger” segment did in the previous decade. Dickey’s Barbecue Pit is the segment’s leader in terms of unit count and sales by a mile, analogous to Five Guys in the burger segment. But there is no real Smashburger equivalent of a clear-cut No. 2 brand; rather, there’s a “long tail” of regional brands eager to carve their niche out of the menu category. The barbecue subsegment nails catering by necessity and is rapidly figuring out how to make a dinnertime and special-occasion food convenient and affordable at lunch on any day of the week.

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Darren Tristano

Darren Tristano is President of Technomic Inc. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations.

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