We recently covered the growth of the fast-casual segment of the restaurant industry in terms of both sales and traffic. Many believe the growth is due to blurred lines between pricing in other segments — QSR and casual dining.
But are fast-casual chains innovating to meet the moment? Well, they’re certainly not resting on their laurels.
New York City-based Just Salad isn’t quite two decades old, but has been on a tear post-pandemic. In 2023, the fast-casual chain saw an 87.5% increase in same-store sales with only a 25% unit-count growth, according to Technomic.
It’s competing with what can be referred to as the “big guns” in the premium salad and bowl segment, Sweetgreen and now CAVA.
AUVs at Just Salad are $2.2 million, compared to $2.6 million at CAVA and $2.9 million at Sweetgreen. Those chains have been around much longer than Just Salad and have larger footprints. Just Salad has just 75 units and has just recently been venturing into the suburbs, a plan its competitors implemented earlier in the pandemic as part of their growth strategies.
The three chains saw some of the highest growth in units and sales in 2023. CAVA saw a 59.8% same-store sales increase and a 30.4% unit-count increase last year. Sweetgreen grew a bit less, with 24.2% same-store sales growth and 18.8% unit growth.
Washington, D.C.-based CAVA’s success can most likely be attributed to the chain’s IPO in June 2023, which allowed for increases in same-store sales through the end of that year.
The successes of CAVA’s IPO in 2023 and Sweetgreen’s in 2021 are a testament to the salad and bowl category’s longevity. Both were some of the largest and flashiest IPOs the industry had ever seen.
If anything, that shows the desire for bowl and salad concepts on the higher end. Chains like quick-service Salad and Go are growing rapidly as well, but it’s a drive-thru-only concept with a lower price point. It’s not the same to the more urban and suburban consumer who desires these higher-end chains.
One of the ways Just Salad is capitalizing on the demand for bowl and salad concepts as fast casual rises is by implementing various unit types.
Until now, Sweetgreen has been the most successful with this strategy, with its Infinite Kitchens that have automated makelines and saw 26% restaurant-level margins over the first few weeks of 2024.
Over the units’ first year, which concluded in May 2024, the Infinite Kitchens had 10% higher average checks and 7% higher margins than other units. The Los Angeles-based chain was so happy with the results of the units that it plans to open around 10 in 2024 across the country.
Just Salad is also diving into new prototypes with drive-thrus.
Many fast-casual salad and bowl chains have talked about drive-thrus to reach new customers as they expand into the suburbs, but some have just discussed it or left the prototype on the shelf.
CAVA has dozens of drive-thru locations and has increased that number as it’s expanded into the Midwest using the “coastal smile strategy” that Tricia Tolivar, CAVA Group’s chief financial officer, spoke about ahead of the IPO last year.
Sweetgreen has a drive-thru prototype but hasn’t said if there are any being built.
In August, Just Salad will open its first drive-thru in Livingston, N.J., and has three to five more in the pipeline.
Because fast-casual chains have had to keep up with increased off-premises demand, the Just Salad prototype uses a separate makeline for drive-thru customers.
Half of the chain’s current orders are ordered for off-premises across its almost 100 stores.
“Looking at somebody like a Chick-fil-A, [for which] the city was open to having a drive thru, but they didn't necessarily want a 50-car stack,” said Just Salad chief concept officer Caryl Scobbie. “We’re able to sort of accommodate both. We’re not so overly daunting where we’re necessarily going to disrupt traffic patterns, but at the same time, we’re still a great draw.”
Foot traffic, the illusive metric most restaurants just can’t seem to improve in this economic environment, is also important for these chains, despite the investment in off-premises.
According to Placer.ai, Sweetgreen saw year-over-year traffic increases ranging from 21.4% to 51.6% between April 2023 and March 2024.
CAVA is a similar story.
Visits to the chain in Q1 2024 were up 23.6% year-over-year, according to Placer.ai.
This is anomaly for the industry but not the fast-casual category. Both Chipotle and Wingstop reported traffic and sales increases in Q1.
It’s too early to say if the category will continue to grow and innovate, but it looks like there’s a long runway ahead for upscale fast-casual.