Article
Truth time: Fast casual leaders answer your questions
CEOs discuss everything from marketing and growth to washable dishes and conumer analytics.
January 30, 2014 by Cherryh Cansler — Editor, FastCasual.com
Leaders of some of fast casual's most successful brands weighed in on a variety of issues facing the industry today during a live event hosted by NRA's Fast Casual Industry Council.
The event was not only a rebroadcast of a session during the 2013 NRA show featuring Don Fox of Firehouse Subs; Geoff Hill of Roark; Mike Hilsop, chairman and CEO of Corner Bakery; Kevin Reddy, chairman and CEO of Noodles and Company; Geoff Hill, VP of Roark Capital Group; and Darren Tristano, EVP of Technomic Inc., but Tristano, Fox and Hill also were watching the event and answering questions that attendees posed while watching the session. Some of those Q and As are below.
Q: What will fast casual look like in five to 10 years?
Tristano: Bigger! Fast casual growth will outpace the industry, and unit expansion will shift share from more traditional segments like casual dine and QSR. Likely, maturity will see decline for some older and less relevant brands.
Q: How do you attract customers during the snack time part of the day?
Tristano: Happy hours have been popular for LSR. Starbucks and Steak 'n Shake and Sonic Drive-Ins have done beverage happy hour promotions. Also, in Family Style, Friendly's recently launched an ice cream happy hour to attract guests Monday through Friday. Promote social occasions as an opportunity.
Hill: First of all, your brand needs to be one that has the ability to attract this type of daypart. I would focus on creating menu items that truly fit your brand from a menu perspective. I see brands bringing in items that don't come close to their brand DNA.
Fox: Can be tough in fast casual, due to the inherent disadvantage relative to convenience, which I believe is critical for this daypart.
Q: What are the top things you need to look for before deciding to take your brand internationally?
Fox: The No. 1 thing is understanding the consumer culture, the need to modify your brand based upon that culture, and then your capacity to do so from a supply chain perspective. Of course, there is a very long laundry list after that!
Hill: Do not think about international until you have a very solid base of U.S. stores (100-plus minimum). This is one of the largest mistakes I see restaurant brands make. They get a call from someone that will pay them $500,000-$1 million in upfront fees for a country, and they say "yes" before they are ready. That up-front fee will cost you four times that much until you are ready. Until you are large enough where you can hire a dedicated leader (a good one) of your International business and be willing to invest a decent amount of money in the first couple of years, don't launch international.
Tristano: One of the top things to understand is how well your brand and your product will adapt to new international markets.
Hill: Supply chain is a big one. You also need to make sure that the reasons your brand is great in the U.S. from a consumer perspective will also match the country you are considering. Each country has different attitudes, taste profiles; that could determine success or failure.
Q: Do you think using washable wares helps reinforce the value of the FC dining experience with consumers or do they not pay attention to those details?
Fox: I do believe it adds value and a quality cue. In fact, at Firehouse, we are just now converting our dine-in salads to washable bowls (with great results).
Q: Is there any change in the reality that people say they want healthy but don't make those choices in the restaurants? If so, what is "healthy" to you?
Tristano: Our consumer research indicates that just over 50 percent of consumers seek healthy options when making a choice at restaurants, but less than half of them actually purchase the healthy options opting for indulgence.
Hill: That is absolutely true. We just bought CKE restaurants (Hardee's and Carl's Jr.). The research says that the brand should move to healthier options based on what the consumer says on an online survey or a focus group. However, when they get to the restaurant, they order the Thick Burger verses the salad. This phenomenon won't change anytime soon. However, I do feel it is important to offer your guest a healthier option since more people (like me) appreciate that when we are trying to eat healthier.
Q: What is the key to your brand success? How can I get it started?
Fox: The No. 1 ingredient for our success is the culture of our brand and bringing on board the right people who believe in it.
Hill: When I look at brands that I personally want to invest in, I think of the following key characteristics: 1. They have true differentiation and are defensible. 2. They have outstanding unit level economics. 3. They are not overly complicated to operate at the management and employee level. 4. They are not riding a fad that could go away as quickly as it came
Q: Have your expectations for employee uptake of insurance under the ACA changed? Are most operators waiting for 2015 before implementing?
Fox: Most brands are waiting to roll out. However, I already implemented it for our 31 Firehouse Subs restaurants. We offered a much better plan than a basic Bronze, plus are paying a larger portion of the premium than the law dictates, so our level of crew acceptance is certainly higher than what the general industry would experience if offering just the minimal product with minimum employer contribution.
Q: You mentioned drive-thru was not a part of the "profile" of fast casual, yet some of the fastest-growing chains have successful drive-thrus like Panera.
Fox: It can be a valuable complement to a traditional fast casual concept. If a brand can make it work within the brand architecture of food quality and speed of service, it can be of great value. But I doubt you will see fast casual players evolving to where they have QSR-like drive thru percentages as the norm.
Hill: Drive-thru is a relatively new phenomenon for fast casual. Not all Paneras have drive-thrus. You will see it grow, but since everyone in fast casual is chasing end caps with patios and a drive-thru, the brand will need to be able to win without it to survive long-term.
Q: What role do you see consumer insights playing in helping grow your brands over the coming years?
Hill: Consumer insights are very important. Understanding what your brand is and what makes it special in the eyes of the consumer is vital. Doing this correctly will pay dividends over time.
Fox: Consumer insights are more important than ever. A growing population creates greater segmentation, and more divergent needs with consumer segments. To best serve those needs ... or to precisely target your sweet spots ... you really have to work to understand the consumer with quality research and insights.
Q: What do you see as the three biggest challenges for the Fast Casual industry over the next three to five years?
Don Fox: 1. Availability of quality real estate. 2. Overcoming external pressures on cash flow (for example, government regulation). 3. Having a strong enough middle class economy to support the growth of the category.
Read more about trends.
About Cherryh Cansler
Related Media
Food & BeveragePresented ByOracle
FranchisingPresented ByJeff's Bagel Run
Subscribe
Get the latest news and resources from Fast Casual.
