Fast Casual Restaurant Category Outpaced The Restaurant Industry As A Whole In 2010

Posted on June 27, 2011 by Melissa Lim

In 2008, quick-serve and fast-food restaurants and franchises were one of the few industries in the country that seemed to be unaffected by the recession.  If anything, many of the top fast-food chains reported growth amidst the flat-lined or declining numbers of nearly every other industry.  As the old saying goes, the two industries that thrive in a recession are alcohol and entertainment, and for the majority of Americans, dining out accounts for a large portion of the entertainment expenses for the household, with things like movies, video games and vacations taking a back seat when money is tight.

It makes good sense to consider that as many Americans struggled to make ends meet, the prospect of grabbing a quick, cheap meal often fit the bill; however, in 2009, a relatively new sector of the restaurant industry, known as fast casual, began its steady rise to nearly $18.9 billion in 2010, outshining the entire restaurant industry as a whole in terms of growth rate. There's no hard facts or studies to explain the shift, but the most popular theory is that as the economy recovers, people can afford to eat a better meal, and this relatively new category of restaurants allows a family to sit down, get a hot meal that's typically more nutritious than fast-food (and often tastier) and get out the door for less than $10/person.

Fast casual restaurants are particularly famous for Asian cuisine/noodles, Mexican food and what's known as the "Better Burger", while they mainly differentiate themselves from fast-food restaurants by having an average check of $8.50 or higher, the option to purchase beer or wine with your meal, and the lack of a drive-thru window.

The popularity of restaurants such as Qdoba, Fatburger and Panda Express have lead to rapid growth and nearly universal brand awareness for the more dominant players in the space.  Cringing at the description of many of these restaurants as "fast-food for grown-ups", many fast-food giants are scrambling to come up with their own strategies for engaging the fast-casual dining market through their existing properties, as well as, in some cases, launching or acquiring their own fast-casual restaurant brands (most notably, Chipotle, which was owned by McDonalds Corp. until recently).

Fast-food giant McDonalds recently launched an initiative to revitalize many of its locations, trading the clowns and balloons for modern architecture and branding, and expanding their product offering beyond burgers and fries towards gourmet coffee and entree salads.

Similarly, Yum! Brands (the company behind Taco Bell, Pizza Hut and KFC) have begun opening stores built to eco-friendly specs, designed to save energy and appeal to the environmentally conscious diner; yet the prevalence and growth rate of fast-casual restaurant franchises continues to outpace the stalwart fast-food giants.

Perhaps it's the happy medium between a 'cheap' meal and a 'great' meal, perhaps the branding and aesthetic of fast casual appeals more to the newer generation of workers. Whatever the case, fast-casual restaurants are proving to be a powerhouse in the restaurant and franchise opportunities industries, proving that America always has an appetite for a good meal.