Fast-casual players may have found success by offering a fresher, higher-quality alternative to fast food and a less-expensive option to casual dining, but that does not mean the segment is without challenges, according to The NPD Group.
Although the fast-casual segment has swelled to include 13,000 units and tripled its market share in the past 10 to 15 years — and was the only restaurant segment to grow in the past five — it still battles perceptions of being unaffordable and a shortage of brand-loyal fans.
“Everyone’s talking about their success, but they have challenges, too,” said Bonnie Riggs, an analyst with Port Washington, N.Y.-based NPD. “If they are going to continue to grow, they will have to meet those challenges.”
According to recent NPD research, fast-casual restaurant consumers skew younger and are largely educated and more affluent. Adults aged 18 to 34 are the biggest users, and women, in particular, find the segment extremely appealing. Further, most customers visit at lunchtime, typically stopping for a quick meal while running errands or shopping.
Fast-casual users fall into four groups, NPD found, including loyal customers, switchers, lapsed users and the price sensitive. Thirty-eight percent of fast-casual users are loyal, claiming they go to the same concepts regardless of special offers. Meanwhile, 40 percent are so-called switchers, who say they go to concepts based on new items or promotions. Fourteen percent of users are lapsed, admitting that they seldom visit or think about going to fast-casual outlets. And about 8 percent of users fall into the price-sensitive category and visit the segment only when presented with a deal.
Among consumers that have not yet visited fast-casual restaurants — a group that skews largely older and lower income — NPD found price was a significant barrier. While 43 percent of those surveyed said they didn’t frequent fast-casual players simply because they visited other types of restaurants, nearly one-third indicated price was a deterrent. Of that one-third, 18 percent said fast-casual concepts were too expensive, and 13 percent said it was not a good value for the money. The average check for lunch at a fast-casual restaurant is $7.17, compared to $5.45 at a fast-food restaurant, $8.71 in family dining and $11.26 at a casual-dining restaurant.
Location and brand awareness are also barriers for those who have not yet visited fast casual, NPD found. Thirty-three percent of nonusers said there were no fast-casual restaurants in their area, and 20 percent said they just don’t think of visiting the segment. Meanwhile, 29 percent said they are eating at home more often.
Fast-casual visitors surveyed rated the segment higher than its fast-food competitors in many attributes, including taste and flavor of food, quality of food, freshness, restaurant cleanliness and offering food prepared the way they like it. However, when it comes to being affordable, quick service beat out fast casual.
