Fast-Casual Restaurants Are Creating New Competition

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The term “fast-casual” has been an industry buzzword in Canada for a few years now, just as it was in the U.S. at the beginning of the decade. The upscale quick-service restaurant (QSR) sub-segment offers quality service and food, which amounts to a higher check average than QSR. It also compels consumers to choose between freshness, quality and variety rather than speed of service and value pricing.

While still relatively underdeveloped in the Canadian market, the fast-casual sub-segment is making significant inroads, capturing six per cent of all QSR visits in Canada, as the steady increase in units drives growth. And, Canadian fast-casual concepts are likely to continue on a strong growth path, especially as full-service customers trade down to fast-casual and more QSR customers trade up to fast-casual. Clearly, customers are satisfied, so fast-casuals can demand a higher price point, because these units serve made-to-order quality offerings in an upscale environment.

Overall, convenience is the number-1 driver at fast-casual restaurants (as it is at QSR), but these winning concepts make customers feel good, too. Today, 50 per cent of fast-casual customers visit such restaurants, spurred by convenience, but, more importantly, 49 per cent of customers say the fast-casual market fits their taste in foods, while 45 per cent feel the sub-segment offers good value for the experience. It’s clear the fast-casual point of difference is the food, whether consumers have a craving, want quality food or are searching for healthy choices.

Even with its quality positioning, the fast-casual market is particularly vulnerable as it may not be affordable to visit often. So, QSRs clearly hold a competitive advantage with their average eater checks. Furthermore, casual-dining has been promoting lower-priced menu options to compete with fast-casual. For example, Boston Pizza introduced a promotion that allows guests who buy a pizza to get a second one at half price.

To compete successfully in the fast-casual arena, operators need to focus on menu innovation. Traditional QSR operators and others who view fast-casual as part of their competitive set need to address menu features that distinguish them from others. In particular, it’s important to offer food options that are perceived to be healthful while also offering great taste and flavour. It’s also important to serve the food in a fresh, clean environment. After all, Canadians love patronizing restaurants, but today’s focus is shifting towards quality offerings that allow customers to feel good about eating out of home. l

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