Skift Take
As traffic slows down, fast casual chains have to step it up in other areas — menu innovation, easy ordering options — in order to keep bringing diners back.
— Erika Adams
The fast casual market is inching closer to its saturation point. According to a new study from the NPD Group, a market research firm, fast casual restaurants are seeing dips in traffic this year due to aggressive new store openings in this space.
NPD defines fast casual as a quick service restaurant that offers better service, higher quality food, and typically sees a larger average check size than a Wendy’s or McDonald’s. The study names Chipotle, Panera, Panda Express, and Raising Canes as the fastest growing restaurants in the fast casual category (although the difference between a chain like Raising Canes, defined here as fast casual, and Chick-fil-A, a more traditional fast food chain, is a thin line at best).
According to the report, visits to fast casual restaurants have grown by six percent annually for the last five years. In the same span of time, the number of fast casual chain units in the U.S. has grown by seven percent. From 2013 to 2017, NPD found the number of fast casual chains climb from 19,231 units to 25,118 units nationwide.
As the amount of store openings continues to rise, it is dragging down overall restaurant traffic in the sector. The growth in fast casual restaurant traffic dropped from 7 percent to 4 percent in the past six months, but even slowed growth is growth overall. From May 2017 to May 2018, NPD recorded a 5 percent growth in visits to fast casual chains.
That 5 percent growth might be slower than usual, but any traffic growth is good news for restaurants these days. Comparatively, NPD noted that total restaurant industry traffic has remained flat for the past year.
While Chipotle, Panda Express, and their competition chase expansion, there’s many obstacles on that road. Aggressive growth must be paired with the ability to maintain high quality food at scale, which will now be under the spotlight as diners get choosier about their lunch options. If the quality of food — one of the main differentiators between quick service and fast casual — suffers, that fine line between traditional quick serve and fast casual will only get blurrier.
