Fast Casual Restaurants - Better burgers, choicer chicken

The Economist ^ | January 10, 2015

[SamAdams76]

BRIDGING a gap in the market between fast-food joints and full-service restaurants, fast-casual chains such as Shake Shack, Nando’s chicken restaurants and Chipotle Mexican Grill are enjoying success across the world. The combined sales of American fast-casual outlets rose by 10.5% last year, compared with 6.1% for fast-food chains, according to Mintel, a market-research firm.

There are four main reasons why these outlets have been winning customers. First, they promise “fresh” food, meaning at the very least not frozen. Chipotle also says it uses, where possible, meat from animals raised without hormones or antibiotics, and organic and locally grown vegetables. Having once been controlled by McDonald’s, Chipotle is now a threat to its former parent. Although still relatively small, it is enjoying 20% annual growth, quite a feat in the crowded restaurant market.

Second, they offer diners a high level of customisation, such as choosing each ingredient in a sandwich, burrito or burger. This appeals to fussy eaters and those with allergies. The service is not always as quick as at a burger joint but, it seems, quick enough. Some fast-casual chains let diners order at their tables.

Third, clever pricing helps these chains optimise their profits. They offer some dishes at around the same price as those at burger joints, but they seem to be better than McDonald’s at nudging diners towards pricier dishes and extras. Fast-casual chains typically manage to squeeze 40% more out of each diner’s wallet than fast-food joints do.

Fourth, fast-casual chains often try to give each outlet a touch of distinctiveness. This distances them in the eyes of consumers from the “corporate” feel of burger chains—and their legacy of bad publicity—says Sophie Carroll of Planet Retail, another research outfit. Nando’s, for instance, decorates its restaurants with South African art.

For all their success so far, some of the fast-casual chains are finding that as they get bigger, they come under more scrutiny. Campaigners have recently criticised Chipotle and Panera Bread for using ingredients from genetically-modified crops and artificial additives—they say they are working to eliminate these. Campaigners against the use by companies of (legal) tax-avoidance techniques have added Nando’s to their targets. Fast-casual restaurants are joining the ranks of big business and having to endure the attention that comes with it.

[SamAdams76]

Fast Casual food chains are quickly overtaking the landscape.

Chipotles; Panera Breads; 5 Guys; Shake Shack; Smashburgers; and Panda Express to name a few of the bigger ones. But there are also a slew of up and comers such as Hopdoddy; Veggie Grill; Piada; Potatopia; Blaze Pizza; and Bolocos, just to name a few of those.

The category is literally exploding and could soon obliterate the existing fast-food giants like McDonalds; Burger King; KFC; and Taco Bell.

What's different about these "fast-casual" chains is that they provide a cleaner, "hipper" storefront. The quality of the food is much better. More fresh foods are used as opposed to having many food items (such as fries, burgers and chicken) processed and flash-frozen in giant warehouses where they can be stored for weeks before being shipped to the local restaurants.

The under 30-crowd feel more comfortable in these new trendy upstarts. They can lug in laptops, mobile phones and not feel out of place. You don't generally have welfare types sitting around with noisy out-of-control kids running about the place. No cages with plastic balls, no scummy tabletops and no "just-out-of-prison" type dragging a filthy mop across the floor, who always seems to be mopping the floor around you as you try to eat.

Fast casual is a nice alternative to traditional casual like Applebees; Outback; Chilis; and TGI Fridays, etc., where the waits for a table can be long and the service is often sketchy. Not to mention much more expensive and plus, you are expected to tip.

Also, these new fast-casual restaurants tend to have a trendy, upscale, upmarket feel to them, and this greatly appeals to the Gen-X and Millennial demographics, who just want to get in and get out but have a nice experience without all the waiting around.

[grania]

The thing is, as the chains get larger, they tend to become more like the established chains. Panera, for example, has some good stuff, but you really have to watch the ingredients...some of it is very commercial. Chipolte still hasn't discovered healthy bread, and I wonder how fresh some of their foods (such as the salsa) really are.

Most of the competitors...Applebee's Longhorn, RubyTuesday etc started out as healthy alternatives. Now, not so much.

[CARTOUCHE]

Panera, a woman’s club. Chipotle, a cleaner Taco Bell. I am supposing that the marks that concern themselves with whether the beef was grass fed or contains growth hormone are not those of us who hang around websites like FR. The girly man goes out of his way to fetch these items for the girls in the office. The real men park their cans at Whataburger, take care of business, and get back to work.

[gusopol3]

5 Guys—slow fast food.

[peggybac]

What??? A possibility of no more Crunch Wrap Supremes??? NOOOOOOOOOOOOOO!

[SamAdams76]

You make a good point.

When dining out, I always try to find the new or just-opened restaurants. That is when you are going to typically have your best dining experiences. This is because the newly opened restaurant is trying to create buzz and attract a customer base and also the owners and employees are typically motivated and at their best.

Once a restaurant is established and they have a steady stream of traffic, now they need to switch their focus to profitability. So you start noticing short cuts here and there. The portions are a bit smaller. The drinks are poured more judiciously. Maybe the carpets are only getting professionally cleaned every other week instead of twice a week. Help wanted signs are on the front as some of the original employees start to turn over.

This is especially true with chains, as corporate begins to squeeze for more profit. Some of the individually owned (non-chain) restaurants can keep a high level of service for years and years, but it's tough to do. Most restaurant fail within the first year or two.

[Magic Fingers]

Very impressive.

[AEMILIUS PAULUS]

Our local Panera was dirty and I did not go back. Maybe I should drop in and see if they changed.

[discostu]

Nobody’s a mark. Most of these places serve food that just plain tastes better, and is only slightly more expensive. Chipotle tastes a lot better than Taco Bell ever could hope to, and you get to watch it get made, customizing it exactly like you want. Whataburger is nasty, 5 Guys and Smash are much tastier, and again, not much more expensive.

Real men eat good food and don’t need to drag other people down to feel good about themselves.

[Zuben Elgenubi]

Panera, a woman’s club.

I believe you are correct.

[QT3.14]

The good 'ol days:

[jjsheridan5]

My rule of thumb is simple: with the exception of high quality restaurants, I never eat anywhere that I cannot see the food preparation area. And if I see anything I don’t like, I leave and don’t come back. I used to make an exception for new fast food restaurants (like an Arby’s which opened near where I used to live), but they go downhill so fast it just isn’t worth it.

[CARTOUCHE]

OK you can pay more for your perceived better ingredients and more flavorful food but don’t cut down Whataburger just to make YOU feel better.

[jjsheridan5]

Whataburger is nasty, 5 Guys and Smash are much tastier, and again, not much more expensive.

You like Smashburger? I have tried it 3 times, and been disappointed every time. Tasteless, and overpriced, IMO. I have been told that chains like Applebees actually have much better burgers, but haven't tried them yet. Did try an IHOP burger once. And only once.

[discostu]

Well since I’m buying food for taste then perceived (tastes) better IS better. Whataburger is nasty, I’ve got no ego in that statement, it’s just a truth, that is some seriously unpleasant food, in an unpleasant building.

[Extremely Extreme Extremist]

This is a great post. I'm a huge fan of these restaurants. The only real fast-food I eat is Subway, and even Subway has adopted that fast-casual atmosphere.

I only go to McDonald's for their vanilla latte coffee on payday Fridays. That stuff will wake you up faster than a defibrillation machine.

[discostu]

Smash is tasty. Good beer selection too. Applebees used to be good, but they’ve hit the skids hard lately. My wife has a club that meets at IHOP, she complains about the food, I ask her what she got, it’s wasn’t pancakes, I remind her it’s the International House of Pancakes not the international house of whatever she ordered.

[Michael.SF.]

Why not send them an email And complain?

[AEMILIUS PAULUS]

Not worth it to me. There are an awful lot of competitors.

[CARTOUCHE]

You’re still fooling yourself if you think that an organic tomato is better for your or tastes better than the one that Taco Tico serves-up. And nobody chime in that you’re doing it to avoid cancer of whatever. There is NO evidence that organic is safer for you that the trace amounts of pesticides in traditionally grown foods.

A tortilla made with sun-dried tomato is still bread stuffed with the same rice and ground beef flavored with tomato sauce and the same green chiles that everybody else serves. I am saddened to know that so many of you are so easily deceived.

I take the bulk of my meals at home so I can watch them being made.