Article

2010: Fast Casual year in review

Healthcare reform, bankruptcy protection and brand overhauls highlight a year full of the quintessential highs and lows.  

December 22, 2010 by Valerie Killifer — senior editor, NetWorld Alliance

The year got off to a rocky start for restaurant operators across the industry. While some brands looked to Chapter 11 bankruptcy protection to help them stay in business, others invested in rebranding initiatives to stay top-of-mind.

The industry’s struggle to make gains, as tracked in the monthly National Restaurant Association Restaurant Performance Index, paid off in October as the NRA’s RPI posted its highest level of performance since September 2007.

The gain was driven by same-store sales and customer traffic increases, both positive signs for the year to come.

Here's our view of the top stories in 2010, in no particular order, and a look at what lies ahead in 2011.

1. Daphne’s Greek Café files for bankruptcy protection: The year started off with Daphne’s Greek Café and the bankruptcy filing that shocked industry insiders. The poster child for Greek fast casual concepts found itself in a position of mounting debt and therefore filed for Chapter 11 bankruptcy protection in January. In July, it was announced the concept was sold to Trefethen Advisors LLC, with William Trefethen to take over as CEO. Trefethen said he had always been a fan of the concept and immediately went to work establishing a new brand strategy. The transaction closed in August and shortly after a new line of pita melts was added to the menu. Not much has been heard from the chain since then, but optimism remains high for a rebound under its new ownership.

2. Lime Fresh Mexican Grill signs licensing deal with Ruby Tuesday: If 2010 proved anything it was that the casual dining segment was finally paying full attention to its fast casual counterpart. In September, it was announced that Maryville, Tenn.-based Ruby Tuesday's signed a licensing agreement last week with LFMG International LLC for the development rights to the South Florida-based fresh-Mex chain. Of the fast casual category, Ruby Tuesday’s spokesman Rick Johnson said: "It's a segment that has sustained growth over the last several years, even during recent economic times. There's more demand than supply.”

3. Bruegger’s, Qdoba, Fazoli’s and Boston Market redesign stores: Brand differentiation was the name of the 2010 game with several concepts reinvesting in image overhauls – from merely store-design updates to complete brand restructuring. While Bruegger’s and Qdoba made some interior upgrades, Fazoli’s launched a new campaign that featured menu, décor and service model upgrades. The campaign set the stage for Boston Market to launch a similar effort. Both chains are owned by Sun Capital Partners. Fazoli’s is still in the process of its brand growth strategy, while Boston Market has almost completed its market-by-market rebrand.

4. Passage of the Food Safety Modernization Act:Food Safety jumped onto President Barack Obama’s radar in 2009 and led to the March creation of the Food Safety Working Group. The group, headed by Vice President Joe Biden, advised the administration on how to upgrade the food safety system for the 21st century, and recommended a new, public health-focused approach to food safety based on prioritizing prevention, strengthening surveillance and enforcement and improving response and recovery. The food safety focus of Obama’s administration also has led to the recent passage of the Food Safety Modernization Act, which is now awaiting Obama’s official signature.

5. Healthcare Reform: It seems every year there are major legislative issues that leave some restaurant operators wondering if it pays to be in business. The healthcare reform bill was one such measure. While consumers have expressed optimism about the menu labeling legislation, some chains have been scrambling to revamp menu items in an effort to disclose healthier menu options. Fast casuals operators don’t seem too concerned about menu labeling, as many already offer healthier menu alternatives than many of their industry counterparts.

6. Mobile marketing: Foursquare, Twitter and other social media applications are changing the marketing landscape for restaurant operators. Many concepts used 2010 to hone and highlight their social marketing strategies.

What do you think the most important stories were in 2010? Comment below.