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Fast Casual Eating Industry's Lunch


Fast Casual Eating Industry's Lunch

Economic shifts and cultural preferences accelerated by Generation Y and Z’s new attitudes have created an outspoken segment of customers who demand high quality, locally-sourced meals offering bold and diverse flavor profiles at a fair price, delivered quickly. While some concepts are fulfilling this tall order – ChipotlePaneraFive Guys, and Shake Shack to name a few – the entire restaurant industry is changing in real time to meet evolving consumer tastes.

Looking back

For the fast-food industry, efficiency at every dimension of the experience had historically been the prime consideration – one well suited to the needs of its customers. But as fast casual concepts took hold in the mid-1990s, a new kind of consumer was emerging. The economic boom of the previous decade and rise in dual-income families resulted in increasingly affluent consumers with busier schedules, interested in cooking less and eating out more. The efficiency offered by the fast food concepts started to lose its appeal to those seeking extended hours and more diverse options.  

Where we are now

With traditional fast food operators having difficulty delivering on local ingredients and quickly changing menus at scale, the fast casual market began to capture the attention of the tens of millions of consumers looking for something beyond the bun,quickly making the fast casual sector the growth engine of the U.S. restaurant industry:

  • Increasing 550% since 1999, ten times the growth in the fast-food industry2
  • Exceeding its five-year compound annual growth rate of 11.7% in one year (2014) – suggesting ongoing growth potential continues3
  • Climbing 12.8% to $30 billion in annual sales in 2014 – nearly double the other restaurant segment’s growth rate4
  • Forecasting growth in the double digits through 2022, while the rest of the restaurant industry is predicted to only eke out half a percentage point5

While not just capitalizing on a change in consumer tastes, the segment has proven to be both operationally nimble and savvy in creating an experience that has a value all its own. In January 2015, The Economist highlighted four best practices that fast casual concepts have successfully used to out-pace fast food6:

  1. Delivering “fresh” food: Consumers increasingly care about eating higher quality food. That is, unfrozen, grown organically and locally, from animals raised without hormones or antibiotics through sustainable practices. Fast casual restaurants are adopting and promoting these trends, endeavoring to strike a greater contrast against the fast food sector.
  2. Providing a high level of customization: Gluten-free? Nut-free? Dairy-free? Vegan? No problem. Fast casual restaurants are increasingly accommodating the most specific consumer preferences and featuring menus that highlight not only nutritional facts, but also food sourcing information.
  3. Cultivating individuality: To nurture a home-grown appeal, fast casual concepts are endeavoring to give each location a sense of character, often showcasing local artists’ work or adding distinctive decor in an effort to increase the distance from the fast food experience.
  4. Balancing price and experience: Typically capturing 40% more out of each diner’s total spend than their fast food counterparts, fast casual concepts are carefully offsetting perceived value – including menu offerings and environment, as well as apps and other technology geared to enhance the customer experience – against price to optimize profits. 

Moving forward

Casual dining restaurants are also taking notice of fast casual success. To keep pace, many are testing elements of the fast casual model, like takeout or grab-and-go options catering to urban consumers in commercial settings. In May 2015, Uno Restaurant Holdings announced expansion of its Uno Dué Go (UDG) concept, a more casual, quick-service version of its Uno Chicago Grill restaurant. With a 3 to 5 year roll out plan for UDG locations in New England, Uno Restaurant Holdings recently secured $20 million financing from Citizens Restaurant Finance for general corporate purposes, including a more contemporary remodel to deliver a sleeker in-store experience.7

Darren Tristano, executive vice president of Technomic, believes that fast food and casual dining concepts will continue to borrow from the fast casual model.

“The winning formula of high-quality menu items in upscale settings, with high-touch service at prices between fast food and casual dining, can be applied to any kind of food and is powering growth in segments from burgers and barbecue to sushi and pizza. We’ll continue to see fast casual drive much of the sales growth in the restaurant industry for years to come.”8  

This balancing act between efficiency and flexibility is a difficult one, particularly when it comes to scale. How does your business plan to adapt?

Source: Nation’s Restaurant News

1 “The Chipotle effect: Why America is obsessed with fast casual food”, Washington Post, February 2, 2015:

2 Ibid

“Fast casuals fuel growth of restaurant industry,” Fast Casual, April 29, 2015:


5 “The Chipotle effect: Why America is obsessed with fast casual food”, Washington Post, February 2, 2015:

“Better burgers, choicer chicken: why slightly more upscale outlets are eating fast food’s lunch,” The Economist, January 10, 2015:

7 “Uno plans to open more ‘fast, casual’ versions of its restaurant, including in Boston,” Boston Business Journal, May 12, 2015:

8 “Fast Casual Fuels Technomic Top 500 Growth Once Again,” PR Newswire, April 28, 2015: