As hot new restaurants come and go, the industry is still struggling to reverse a yearslong trend of stagnating customer visits. Not so fast-casual chains, which continue to outshine all other dining out sectors, reveals a new report.
Long the darlings of the restaurant industry, fast-casual chains remain a bright spot, posting significant year-over-year growth in traffic even as overall restaurant visits remain stubbornly flat, reports The NPD Group, a market research firm.
While that continued growth has slowed in the last year, there are no signs that it will evaporate, says NPD.
Visits to fast-casual restaurants have grown 6 percent annually over the last five years, fueled in part by robust growth in the number of such outlets.
There are recent signs, though, of a modest slowdown, says NPD. During the quarters ending December 2017 and March of this year, fast-casual restaurant visits were up 4 percent over the same quarters a year earlier. That is down, though, from a 7 percent year-over-year increase in the third quarter of 2017, NPD found.
But the more significant comparison is with the restaurant industry in general, which posted no growth in those same quarters and showed no signs of a rebound during the year ending in May 2018. By comparison, the fast-casual sector was up 5 percent for the last year.
Based on customer visits, familiar chains like Chipotle, Panera, Panda Express and Raising Cane’s Chicken Fingers were among the top growing brands. The fast-casual segment spans everything from Mexican and Asian cuisines to bakery cafe and gourmet burger concepts.
More affordable than full-service dining and considered healthier and more innovative than fast-food venues, fast-casual outlets have captured the public’s pocketbook and have even inspired fine dining chefs to spin off concepts of their own.
“The quick service restaurant business is being transformed and fast-casual is the impetus for that change,” said David Portalatin, vice president and food industry adviser for NPD. “You’re even seeing established restaurants in quick service (fast food) and the casual dining segment sort of move in that direction in terms of contemporary d?cor, creative cuisine, the better-for-you appeal.”
Not only are visits to fast-casual chains growing, but the number of venues is increasing, too. The number of stores has increased 30 percent over the last five years, surging from 19,231 in 2013 to 25,118 in 2017, according to NPD. By contrast, the nation’s overall restaurant count stood at more than 647,000 last year — a 2 percent decline from a year earlier.
Even as fast-casual continues to grow in popularity, the number of outlets still account for a tiny fraction of the overall industry — about 4 percent.
A good example of the continued expansion of fast-casual is Everbowl, a homegrown concept that originated less than two years ago and has grown to 10 stores mostly in San Diego County.
Specializing in build-your-own acai and other “craft superfood” bowls and smoothies, Everbowl has six more venues under construction that should open by this summer in Encinitas, Menifee, Mission Valley, San Elijo Hills, San Diego State and Carmel Valley.
It is embarking on an even more ambitious expansion plan in the coming years, with as many as nine more leases that could be signed by year’s end, and up to 25 more locations planned for 2019.
Founder Jeff Fenster said his business plan is to open Everbowl stores in high-traffic areas “to ensure that everyone has the ability to access superfoods, fresh fruits and vegetables in the hopes that consumers will integrate these foods into their everyday lives.”
Other local concepts that have grown rapidly in recent years include Luna Grill, a Mediterranean concept, and Burger Lounge. Rubio’s, a longtime San Diego staple that originated in 1983, currently operates more than 200 restaurants.
Portalatin is fairly confident that the fast-casual segment can sustain its growth into the future. A concept like Everbowl, with its emphasis on fruits, vegetables and superfoods like acai, will likely appeal to millennials, which the industry needs to court to succeed, he said.
“Millennials are in peak career and family formation and that’s when you’re going to use restaurants more than any other time in your life,” he said. “But this generation has brought in a different set of food values.They’re in search of authenticity and purity in the food, and the sourcing, as opposed to just healthy, low-fat, low-cholesterol food. So chains are appealing to that dynamic.”
