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An emphasis on seasonality is a differentiating characteristic of Panera, offering a summertime Pesto Sacchettini of “purse-like” pasta filled with six cheeses. Photo courtesy of PANERA. Consumers’ rising expectations prompt fast-casual and casual-dining chains to find their niches

By Rita Negrete

In the years since the Great Recession, restaurant sales and traffic have picked up, but the industry is now hitting a speed bump. Technomic expects U.S. restaurant sales to grow a nominal 4 percent in 2013, representing a slowdown from 4.5 percent growth in 2012.

Consumers seem to be gravitating to the restaurant industry’s middle price ranges, with more than four out of five diners saying they visit fast-casual and traditional casual-dining restaurants at least once a month. Fast-casual restaurants are taking business from fast-food chains, while traditional middle-of-the-road casual-dining chains are cutting into special-occasion visits to upscale casual-dining restaurants.

More than ever, getting ahead in today’s tough business environment means staying ahead of consumer and foodservice trends. Recent sales patterns among top restaurant chains in both the fast-casual and casual-dining sectors can provide hard evidence of what can work to build traffic and sales in both chain and independent restaurants.

The Fast-Casual Sweet Spot
Fast-casual chains boosted sales by 13.2 percent last year, compared with 4.6 percent for traditional quick-service concepts among the Top 500 chains. Among fast-casual chains, Mexican, bakery/café and sandwich concepts accounted for the largest number of concepts in 2012. Menu categories that experienced double-digit sales growth were Asian/noodle chains (up 14.6 percent) and bakery/cafés (up 10.4 percent).

Fast-casual restaurants operate in a sweet spot of price and quality. Restaurants are perceived as menuing fresher, higher-quality offerings than QSRs, in a more inviting and comfortable atmosphere than traditional fast-food restaurants typically offer. On the other hand, fast-casual chains offer lower prices and a more streamlined dining experience than most full-service restaurants. They’re perfectly attuned to today’s demands for fresher fare, “made-for-you” formats and welcoming environments at wallet-friendly prices.

A closer look at some of last year’s fastest growing fast-casual chains reveals a set of common characteristics that get consumers flocking to these concepts.

• An emphasis on fresh fare and consumer choice: Five Guys Burgers and Fries prides itself on freshness, boasting that its kitchens are free of microwaves and freezers. It offers a no-frills menu of signature hamburgers made to order from fresh, never-frozen, high-grade, 100 percent USDA beef, topped with any combination of 15 free toppings. A chalkboard near the entrance of each unit announces the origin of the potatoes used for that day’s fries; next to the chalkboard, fresh potatoes are stacked in origin-stamped crates along with containers of peanut oil used for frying. Orders require about a 10-minute wait. Checks average just over $13.

Joe’s Crab Shack’s beach-themed ambiance and seafood specialties — such as this Classic Steampot — set it apart from other casual-dining choices. Photo courtesy of joe’s crab shack.
• Menus that change with the seasons: With a check average of around $10, Panera Bread/Saint Louis Bread Co. is known for its artisan breads, fresh baked goods, made-to-order sandwiches and café beverages. To emphasize its “fresh” positioning and to build repeat traffic, Panera changes its menu with the seasons. Most recently, the chain reprised its seasonal Strawberry, Poppyseed & Chicken Salad — combining fresh berries with pineapple, pecans and antibiotic-free chicken on romaine — and introduced Pesto Sacchettini Pasta featuring summer basil. Last fall, Panera rolled out a Roasted Turkey & Cranberry Panini — all-natural roast turkey, garlic-and-herb cheese spread, zesty cranberry mostarda and spinach on ciabatta — as well as a Turkey Harvest Salad and pumpkin-flavored baked goods and beverages.

• A healthful menu and accountability in sourcing: Chipotle Mexican Grill has become synonymous with a type of fast-casual eatery that focuses on preparation to order based on ingredients of the customer’s choosing. For an average check of about $11, it offers customizable, premium, better-for-you Mexican fare. The chain’s “Food With Integrity” positioning centers on ingredients that are naturally raised, locally grown and hormone-free. For instance, Chipotle offers naturally raised pork and chicken at all locations and naturally raised beef at select units; it is testing organic, non-GMO shredded tofu as a protein alternative; and it pays a higher-than-market price for Florida tomatoes under its Fair Food Program agreement with the Coalition of Immokalee Workers.

• Global flavors in approachable formats: Panda Express offers Hunan, Mandarin and Sichuan wok-cooked entrées like beef with broccoli, orange chicken, kung pao chicken, sweet-and-sour pork, fried shrimp and mixed vegetables with steamed rice, fried rice or chow mein noodles, along with sides like egg rolls, pot stickers and soup of the day. Checks average $11. Americans’ comfort zone when it comes to world fare is expanding beyond Mexican and pan-Asian, and fast-casual concepts are being developed in new concept slots, such as Korean barbecue and Middle Eastern sandwiches.

• Clear concept and menu differentiation even within a narrow category: A number of last year’s fastest growing chains are fast-casual sandwich shops with check averages of $8 to $9, but these concepts are quite distinct. Firehouse Subs capitalizes on its firehouse theme (inspired by the founding family’s history as firefighters, carried out in a décor that features firefighter memorabilia and backed up by charitable support for local fire and emergency services) as well as its signature cooking method (subs are steam-heated and served hot with melted provolone cheese and high-quality meats). New Jersey-based Jersey Mike’s Subs operates out of simple units set off by retro postcard-style murals welcoming visitors to New Jersey; it markets two dozen hot and cold “Jersey Shore-style” subs made with quality meats and cheeses and fresh bread baked onsite, as well as wraps, soups and salads. And Jimmy John’s Gourmet Sandwich Shop specializes in high-quality subs with premium ingredients and fresh-baked bread served or delivered “freaky fast.” The chain delivers orders within a five-mile radius from early lunchtime until late, and freestanding units frequently offer drive-thru service.

Casual Dining has strong appeal
While fast casual has gotten most of the buzz lately, there are also heartening developments in full service. Within the Top 500 chains’ full-service menu categories, the average sales growth of 2.9 percent for 2012 was exceeded in three menu clusters: steak (up 5.9 percent), seafood (up 4.5 percent) and varied menu (up 3.4 percent).

Technomic research shows that compared with two years ago, consumers today are more likely to visit casual-dining restaurants for a variety of occasions, including routine lunches, everyday meals and snacks, special occasions and meals with colleagues and family members. Here are the ways some of last year’s hottest concepts have capitalized on growing consumer interest in dining out:

• Menu and ambiance that appeal to the whole family: Buffalo Wild Wings operates in a high-energy sports-themed space that attracts both adult groups and parents with kids for a variety of dining occasions; per-person checks average just $13. The chain features a modified full-service format, with orders taken by waitstaff as well as at an ordering counter. A ticker board displays menu specialties, sports scores and Buffalo Wild Wings’ stock price. The chain is known for its bone-in and boneless Buffalo wings and more than 15 signature sauces, including Parmesan garlic, Caribbean jerk and teriyaki. It also offers wraps, burgers, flatbreads, sandwiches, salads, barbecue ribs and popcorn shrimp. The extensive appetizer menu features such items as bite-sized sandwiches, mozzarella sticks and mini corn dogs. Bar service emphasizes domestic beers and mixed drinks.

• Large portions of quality food at value prices in an entertaining environment: Texas Roadhouse is a family-friendly joint serving up big portions of signature hand-cut steaks along with a large menu of made-from-scratch Southern favorites, beer and specialty drinks at value prices (the average check is around $15). Complementing the food is a casual, fun atmosphere with rustic roadhouse charm. In addition to the steaks, the dinner menu offers grilled pork chops, grilled barbecue chicken, a pulled pork sandwich, burgers, grilled chicken salad and barbecue ribs. Starters include onion blossoms, fried pickles, Buffalo wings and grilled shrimp; Southern-style sides include chili and baked beans.

• A memorable focus on adult beverages and compatible foods: Yard House specializes in eclectic variety: an extensive menu of appetizers, entrées and cocktails complemented by what the chain proclaims to be the world’s largest selection of draft beers. A glass-walled keg room shows off more than 600 beer barrels. The beer is carried through banks of exposed pipes to a 100- to 250-tap island bar. Complementing the many brews, the menu begins with appetizers and snacks, including lettuce wraps, chicken wings, coconut shrimp, seared ahi sashimi, truffle fries, chilled edamame, deviled eggs and hummus. Entrées include jerk chicken with shrimp, Southern-style fried chicken, porcini-crusted halibut, barbecue bacon burger, grilled steaks, jambalaya and vodka shrimp pasta. The dessert list offers mini versions of chocolate soufflé cake, crème brûlée and peach apple cobbler. Checks average $21.

• Sophisticated, seasonal, regional fare that consumers can’t get elsewhere: Joe’s Crab Shack specializes in seafood dishes — crab above all — in a fun, beach-themed atmosphere. Décor evokes the feeling of an old fishing camp with a weathered wood façade, tin roof and raised outdoor deck. The menu begins with crab dip, crab nachos, calamari, seafood fondue, garlic mussels, clam chowder and peel-and-eat shrimp. Entrées showcase crab — steamed, grilled, stuffed, barbecued or boiled — plus signature dishes such as crab cakes and crab-stuffed shrimp; also on offer are other seafood dishes as well as a 12-ounce rib-eye steak, chipotle-bacon cheeseburger and grilled chicken with mango salsa. Seasonal promotions reflect regional flavors. Paying homage to its Gulf Coast roots, Joe’s recently offered a Spicy Citrus Steampot with Tabasco sauce and a Third Coast Platter of blackened Gulf redfish paired with Joe’s Stuffers (clam shells stuffed with scallops, shrimp and clam). A Maine Event winter menu featured Lobster Pot Pie. Joe’s specialty menu of sometimes-hard-to-get seafood commands a premium price: Checks average $24.

Yard House Street Tacos are among the eclectic menu offerings that complement the chain’s extensive beer selection. Photo courtesy of yard house.
The Bottom Line
Consumers in search of a dining-out occasion have many options, and their expectations — whether driven by price, quality, overall value or the dining experience itself — are changing. Based on an examination of growth chains in the fast-casual and casual-dining sectors, here are a few universals:

• Consumers are on the lookout for high experience value. That doesn’t mean just low-priced food. Consumers no longer take foodservice occasions for granted. Instead, they’re seeking memorable sensory experiences that they can share with their family and friends — at prices they can afford. Restaurants that click with today’s consumers offer something beyond the ordinary in terms of menu quality or innovation, ambiance, value, convenience, service and/or another resonating point of differentiation.

• Menus matter more than ever. Good service or a quirky environment can’t compensate for food that doesn’t meet consumer expectations. Today’s diners care more about the freshness and healthfulness of the menu. They seek new and bold flavors, but in a format that’s familiar. And diners want to know more about their food and where it comes from — whether that means detailed nutrition information listed on the menu or website, the use of third-party-certified ingredients, or local sourcing.

• Successful concepts are friendly to snacking, sharing and extended dayparts. Fast-casual restaurants typically see peak business at lunch and casual-dining restaurants over the dinner hours; both face many hours of empty dining rooms. But American lifestyles are changing, and successful concepts are taking advantage of those shifts. Fast-casual chains have recently rolled out new breakfasts, whether healthful or hearty. Meanwhile, casual-dining chains have introduced or enhanced menus for afternoon happy hour and late-night dining. Look for more in the way of creative menu innovation beyond the lunch-and-dinner paradigm.

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