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Fast Casual is the Sweet Spot for Foodservice

The fast casual channel continues to thrive, with store openings helping prompt 6% growth annually over the past five years, while the overall U.S. restaurant industry deals with a drop in customer visits, according to The Npd Group’s Fall 2017 ReCount restaurant census.

Fast casual chain expansion increased locations to 25,118 restaurants in 2017, up from 19,231 restaurants in 2013. But traffic growth has slowed in the last two quarters, which is likely a negative impact of an increase in store locations. Fast casual traffic was up only 4% in the quarters ending December 2017 and March 2018, compared to a 7% visit growth in the third quarter of 2017.

Total restaurant industry traffic in the last quarter of 2017 and first quarter of 2018 was flat. In the year ending May 2018, total restaurant visits remained flat and visits to fast casual restaurants were up 5% year-over-year.

Fast casual chains Chipotle Mexican Grill, Panera Bread, Panda Express and Raising Cane’s were the fastest-growing fast casual chains by customer visits.

The key demographic for the fast casual category is customers between 18 to 24 years old and those with a household income of $100,000. Weekday lunch is a popular time for these and other fast casual customers to visit, but all dayparts are showing growth year-over-year. 

The popularity of fast casual restaurants revealed the appeal of an upscale level of fast casual restaurants, which are called fine casual or fast fine. Fine casual restaurants have counter service like other fast casual restaurants, but they offer a higher level of service and fine dining elements, which result in longer customer visits.

For the full story, go to this week’s Food Institute Report.