Report reveals fast casual obstacles to growth

Report reveals fast casual obstacles to growth
Tags: Food & Beverage, Franchising & Growth, Trends / Statistics
August 26, 2010 - Jennifer Litz

Mintel's recent foodservice survey and report on fast casual concludes what many in the limited service segment already know – the enduring growth of the segment. According to the report, fast casual restaurant category accounted for estimated sales of $23 billion in 2010, up nearly 30 percent since 2006.

But the rarer insight of the piece is the segment’s obstacles to growth. Mintel outlined some of fast casuals' challenges to further growth, including the competition with the more plentiful quick-service restaurants, and people’s misperceptions about fast casual brands they haven’t tried. Some highlights of obstacles to overcome include:

Lunch daypart domination – but not supremacy: This fairly young category makes its strongest statement during the lunch hour, with patronage levels almost equaling that of casual dining (26 percent of respondents have visited a fast casual restaurant in the past month and 28 percent a casual dining restaurant). However, fast food still holds a strong lead with nearly 60 percent of Mintel respondents frequenting a quick-service establishment for lunch within the past month.

Vulnerable competitiveness in the beverage category: Fast casuals’ offering of healthier-for-you teas and smoothies help the segment seem healthy and convenient. But other segments are able to match these offerings if shown the payoff, leaving Mintel to foresee “a battle for beverage supremacy.”

Misconceptions from non-patrons: Fast casuals’ relative sparseness compared to QSRs can be a disadvantage when it leads people who have not tried the former segment to draw false conclusions. According to Mintel’s report, 26 percent of adults who have never visited fast casual restaurants believe the segment is too expensive. “This pervasive perception is something the category will continually need to address as it grows,” the report said.

Overall, however, the report outlines the fast casual segment's prognosis as good.

"The relatively new fast casual category has fared well through the recession as people can see the added value in the food and atmosphere, despite the slightly higher price point," said Eric Giandelone, director of foodservice research at Mintel. "The majority of restaurant-goers say quality is the most important determinant in their choice of a restaurant, which will continue to help this category grow."