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Fast Casual 2006: A year in review
December 27, 2006
For the fast-casual segment, 2006 was a year of recognition, milestones and big deals.
Mintel and Technomic Information Services both published reports highlighting the segment's growth.
In Technomic's first Top 100 Quick Casual Chain Restaurant Report, the research firm estimated the segment garnered between $10 and $11 billion in sales for the year and is steadily growing.
"Quick-casual restaurants have enjoyed strong consumer appeal by providing fresh high-quality food, fast service and moderate check averages," the report said. "Once a novelty in the restaurant industry, the quick-casual segment has grown into a major stand-alone category."
Testament to this growth was the opening of Panera Bread's 1,000th bakery café.
"The American consumer absolutely gets it," said Ron Shaich, Panera's chief executive, at the bakery café's 1,000th store opening in Oak Brook, Ill. "And that is people really do give a hoot about quality; people really do give a hoot about where they sit; and people really do give a hoot about the people who serve them." Other notable openings include Chipotle's 500th, Qdoba's 300th, Taco Del Mar's 200th and Camille's Sidewalk Café's 100th.
The year was also filled with major deals. In October, Wendy's International Inc. sold Baja Fresh Mexican Grill restaurant chain to a West Coast restaurant-operating company for about $31 million. Also in October, Fazoli's was acquired by Sun Capital Partners for an undisclosed amount. In November, Roark Capital Group, an Atlanta-based private equity firm, acquired Schlotzsky's for an undisclosed amount, and Panera Bread bought 51 percent of the outstanding stock in Paradise Bakery & Café Inc.
These buyouts were big news not just in the restaurant industry, but on Wall Street. Ashley Woodruff, an analyst at FBR Research, called Panera's "Paradise Bakery" strategy a slight negative in the long term, since the presence of another chain could limit the benefits of Panera's national brand.
"We prefer companies to operate one brand, as we think the development of another brand, even if it is just regional, limits the benefits of creating a national brand like Panera," Woodruff wrote in a research note.
Panera wasn't the only brand catching world attention. Here's a month-by-month look at the year's top fast-casual stories:
January
Starbucks goes Hollywood: Starbucks partnered with Lionsgate to participate in all aspects of the marketing and distribution of "Akeelah and the Bee."
Chipotle's chef has his payday: In the hottest IPO on the New York Stock Exchange since Martha Stewart Living Omnimedia went public in 1999, Chipotle shares doubled in its first day, closing at $44. The company reported double-digit comps for each quarter in 2006.February
Panera removes trans fats: Months before New York City banned trans fats, Panera Bread voluntarily removed trans fat from its menu. Today, all Panera Bread menu items are free of trans fats, with the exception of small amounts that occur naturally in dairy products, meat products and some condiments.
Quiznos faces class-action lawsuit: Franchisees file a class-action lawsuit against Quiznos. They claim the toasted-sub chain is selling them franchise territories, failing to locate or approve the sites, then threatening to terminate their franchise agreements because they have not opened stores within the required time.
Fuddruckers loses its president: Scott Nietschmann, president of Fuddruckers, left the Austin hamburger restaurant chain after less than a year.
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March
Einstein Bagels overhauls menu: The new menu features an expanded offering of top-shelf bagels, breakfast and lunch sandwiches, desserts and a new selection of gourmet teas.
Quiznos sells stake to J.P. Morgan: Quiznos Master LLC names J.P. Morgan Partners LLC a "significant ownership partner" in the company, but did not disclose specific terms of the transaction.Boston Market gives away 4,000 dinners for Daylight Savings: In one of the more creative marketing initiatives of the year, Boston Market assists Indiana residents, who — for the first time — were following Daylight Savings Time. The chain received a lot of publicity for the dinner giveaway.
April
McDonald's reduces Chipotle ownership: McDonald's Corporation reduced its ownership of Chipotle Mexican Grill in the near term and will complete the separation of its interest by year-end to concentrate its focus on McDonald's.
Rubio's settles class-action lawsuit: Rubio's Restaurants Inc. settled a class-action suit that alleged the fast-casual chain violated truth-in-advertising laws by claiming products, such as its Lobster Burrito and Lobster Taco, used lobster meat. They actually used Langonstino, a shellfish closely related to the prawn family.
Tossed announces franchising plans: New York-based Tossed, a fast-casual salad concept, plans to open 200 restaurants within five years and has long-term potential for 1,000 U.S. locations.
May
Corner Bakery Café updates menu: The updates are the first changes in culinary offerings to be made since the fast-casual concept left the Brinker umbrella in February.
Raving Brands acquires Flying Biscuit: According to a news release, Flying Biscuit, whose famous biscuits and unique menu have attracted a dedicated local following, is a unique opportunity for Raving Brands, representing its first foray into the breakfast segment and dayparts besides lunch and dinner.
Panera shows off Crispani 'pizza' to analysts: Panera Bread Co. showcased its new Crispani, a pizza product it hopes will help improve the dinner daypart.
June
Wingstop creates 'Stick to Pizza' TV spots: Wingstop launched new 30-second TV spots in select markets in May that take direct aim at pizza companies serving wings. All four new commercials featured Troy Aikman, Wingstop's spokesman and recent Football Hall of Fame inductee.
Qdoba online contest pays off: Qdoba Mexican Grill said it received 1,000 nominations for its online "Who Do You Love?" promotion.
Corner Bakery hires Noodles executive to lead franchising: Corner Bakery Cafe hired P.J. Evans to lead the chain's franchise development efforts. Evans served as vice president of franchise development for Noodles & Company.
Fuddruckers ad firm resigns: Kolar Advertising resigned creative duties on the Fuddruckers account. The split resulted from a difference of opinion on how to market the brand, said Bryan Christian, Kolar senior vice president and general manager.
July
Pat & Oscar's remove trans-fats from menu: Responding to customers' health concerns, the Pat & Oscar's restaurant chain said it has removed trans-fatty oils from its popular breadsticks and other menu items.
Tony Roma's opens fast-casual unit: Fast & Casual features appetizers, sandwiches, soups and salads as well as several famous Tony Roma's menu items. Au Bon Pain creates new concept for suburban customers: The company seeks to serve an active customer base with diverse dining needs throughout the day: high-quality breakfast and lunch meals, family dinners and an all-day café gathering place.
August
Corner Bakery Café appoints new president: Jim Vinz assumed the duties of president and chief operating officer. Vinz joined Corner Bakery Cafe in 1995 as a multiunit director.
Quiznos exec fired following Internet sex scandal: Scott Darrell Lippitt, Quizonos' vice president of marketing, was handed six criminal charges, including attempted sexual assault on a child.
Bear Rock Cafe rolls out pizza: The new menu item, Pizzetas, is prepared with fresh ingredients on Bear Rock's hand-tossed flatbread.
September
Immigration class action lawsuit filed against Cafe Express: According to the lawsuit, the restaurant defendants and the Houston-based law firm missed a 2001 deadline to file paperwork that could have allowed the employees to become permanent U.S. residents. The employees then were fired because they lacked resident status.
October
Spicy Pickle files for IPO: The 15-unit fast casual filed with the U.S. Securities and Exchange Commission with plans to raise $5 million through an initial public offering.
Daphine's Greek Café creates English learning courses for employees: Daphne's Greek Cafe launched its Sed de Sabre ("Thirst for Knowledge") program, a comprehensive series of English learning courses.
Freebirds World Burrito intros new menu and apparel line: The revamped menus, printed on 100 percent recycled paper, include more information on sauces, flavor profiles and Freebirds community events. Also available on the menus are suggestions for low carbohydrates, low fat and low calorie combinations, as well as an allergy statement.
November
Pollo Campero founder suing the company: Juan Arturo Gutierrez, founder of Pollo Campero, is suing the fresh-Mex chain and other related companies in an ongoing high-profile fraud dispute.
Noodles & Company customers can pay with cell phones: Noodles & Company becomes the first national chain to adopt a new mobile commerce and marketing system that allows customers to pay with their cell phones.
Panera loses lawsuit to Qdoba over lease issue: Superior Court Judge Jeffrey Locke cited Webster's Dictionary as well as testimony from a chef and a former high-ranking federal agriculture official in a ruling that Qdoba's burritos and other offerings are not sandwiches.
December
Cold Stone Creamery forms alliance with Six Flags: Six Flags will open and operate Cold Stone Creamery locations in its branded parks, and the companies will collaborate on innovative marketing and promotional initiatives both in-park and at participating Cold Stone Creamery locations around the country.
ARAMARK unveils new bakery café: The new fast-casual concept targets college kids.
Mama Fu's franchisees sue Raving Brands: Suit accuses franchisor of racketeering and not following UFOC, but legal experts say plaintiff's case might have holes.
The year's most-widely read story
Quiznos terminates franchisees on heels of suicide: The sub chain reacts swiftly following the Web-posting of a franchisee's alleged note.
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