Just like any other business category, the casual dining restaurant industry has gone through some tough times as consumers made cut backs this year.
What made a difference though was how healthy the individual business was in the first place. A weak or mediocre business may fail when times are tough. But those that have a strong brand and a strong marketing plan and healthy business plan will remain strong.
This is from Brandweek:
Fast Casual Chains Not An Economic Casualty
Two research reports show sales in the segment shot up more than 13% last year, and experts predict the growth to continue.
Mintel, Chicago, cites a 13.2% increase in the sector to $11.5 billion last year. Technomic, Chicago, pegs growth at 13.3% and estimates the category to be around $17 billion.
Why is the sector thriving in a so-so economy? Partially, it's because of demographics. Fast casual benefits from having a younger consumer base 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," said David Morris, senior research analyst at Mintel.
The category is stealing baby boomers from their fast food rivals, said Jeff Davis, president of Sandelman & Associates, Villa Park, Calif. "As baby boomers age, they still like that fast food occasion, but they also want a slightly better experience, and so, marketers are exploiting that niche."
Another reason for the segment's success is the fact that its price points aren't that much of a turnoff for consumers who are shying away from sit-down casual dining restaurants, which tend to be more expensive once you factor in tips for the wait staff. Plus, some fast feeders' fare, like Angus burgers, are close in price to their fast casual rivals. Nonpremium offerings have also gotten more expensive because of rising commodity and fuel costs.
Burger King raised prices by 2.4% in May. The home of the Whopper's shares then fell 7% in New York Stock Exchange trading through the quarter ending June 30.
"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, evp at Technomic.
Nevertheless, both BK and rival McDonald's still continue to push value-driven TV advertising, such as BK's "reverse pickpocket campaign." It shows the King putting money back in consumers' wallets.
In response, fast casual chains like Boston Market are running ads saying their fare also is value-driven.
Last month, for instance, Boston Market launched a TV push touting "Meal Size Deals." The spots, via CCT, Denver, promote Boston Market's rotisserie chicken, which come in nine of the 11 meals, all of which sell for $5. Tagline: "Boston Favorites. A better meal for $5."
Boston Market research shows that consumers experienced a 6% higher recall rate when the company marketed its staple product with a value-oriented TV message.
"What we've found is that $5 is a price point consumers really respond to," said Boston Market rep Angela Procter. Sun Capital Partners acquired Boston Market from McDonald's last year.
This is not to say that fast casual is immune to the economic pinch.
David Craven, marketing director at Qdoba, said the burrito chain estimates prices have spiked anywhere from 2-4% across the board for all menu items.
"Like everyone else, we have felt the impact of the economy. People across the board are cutting out dining occasions," he said.
Despite the reports, Wendy's rep Bob Bertini said quick-serve restaurants still have the edge in the "fast" part of the fast casual/fast food equation. Bertini said about 70% of Wendy's business is via the pick-up window.
"People are on the go and they enjoy the convenience factor that our restaurants provide," he said. "This gives us a competitive edge over others in the food industry."
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