Fast casual restaurant chains are bucking the trading-down trend as they’re buoyed by healthier offerings and a narrowing price gap compared to quick-service restaurants, reported brandweek.com.
Two recent studies show fast-casual sales at chains like Panera Bread shot up more than 13% last year, with experts predicting continued growth, brandweek.com said.
A report by Chicago-based Mintel showed a 13.2% increase in the fast-casual, pushing it to $11.5 billion last year. Technomic, meanwhile, pegs the growth at 13.3% and estimates the category to be around $17 billion.
Brandweek.com said this sector is thriving largely because of demographics. Fast casual benefits from having a younger consumer that has more discretionary income. At the same time, it attracts a more affluent audience.
"There is at least equal or greater likelihood of use among higher income household adults," reported. David Morris, senior research analyst at Mintel.
The category is stealing baby boomers from their fast food rivals, and its price points aren’t much of a turnoff for consumers who are shying away from sit-down casual dining restaurants, which tend to be more expensive with tips for wait staff, according to brandweek.com.
Additionally, some fast-food restaurants are raising prices, which is narrowing the gap between QSR’s and fast-casual.
"Prices are on the rise, so it’s not particularly more expensive to go to a Panera than it is to go to McDonald’s. They’re pretty close in price," said Darren Tristano, of Technomic.
Also in the restaurant world this week, The Associated Press reported that shareholders at Wendy’s and Triarc approved a $2.34 billion deal to create the nation’s No. 3 hamburger chain.
Atlanta-based Triarc operates the Arby’s fast food chain and is owned by Peltz. Triarc said in April it would buy Wendy’s, and the name will change to ”Wendy’s/Arby’s Group Inc.”
Triarc CEO Roland Smith will take over as CEO of Wendy’s, while Kerrii B. Anderson, the current CEO, will step down.
Smith has said job cuts will likely be necessary, the AP reported, but he has yet to provide any details on those plans. He offered no new details in the company’s statement but said more information would be forthcoming once the deal closes.