Competitive Watch: Fast Casual Sees Fast Growth

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Competitive Watch: Fast Casual Sees Fast Growth

CHICAGO -- An increased interest in healthy eating, ethnic cuisine and premium ingredients have contributed to a boom in market growth for the fast casual segment. A recent Mintel report estimates that total sales at leading fast-casual chains in the United States doubled within the last five years.

"And what we've seen so far is only the beginning," said Bill Hulkower, a Mintel analyst. "Relative to quick-serve restaurants (QSR) and full-service, there are still very few fast-casual restaurants. As long as they keep updating menus to fit current eating trends, there is substantial room for growth. This category is eating into lunch sales at full-service restaurants, and it's going to pull some sales from QSR. A lot of people just don't have enough lunch time for table service, but don't want to do the QSR drive-thru."

More than half of the Mintel survey respondents stated that they think fast-casual food is more healthful than fast-food offerings. Close to half of the respondents also cited a willingness to spend more to eat more healthfully.

Panera substantially leads the fast-casual sector in sales. Other rapidly-growing chains include Zaxby's, Wingstop, Qboda Mexican Grill and Pei Wei.

Fast casual's increased sales have not gone unnoticed by fast-food competition. In response to the segment's growth, there is a marked increase in the amount of premium items appearing on QSR menus, according to Hulkower.

"QSRs are upgrading ingredients and stretching menus to provide ethnic offerings," Hulkower said. "McDonald's added an Asian salad recently that has fast casual written all over it. With fast casual poised for tremendous growth over the next five years, we potentially have a battle brewing between QSRs and fast casual."