The rise and rise of Fast Casual

By Mark Dempsey
The rise and rise of Fast Casual
Much has been written about “Fast Casual” restaurants – upscale quick-service concepts perceived as offering more service and higher-quality food, with a larger average bill size than other quick-service restaurants (QSRs). This relatively new segment of restaurants has achieved rapid growth by focusing on how it differs from traditional QSRs.  Fast Casual compels consumers to choose between perceived food freshness, quality, and variety versus speed of service and value pricing.

While still relatively underdeveloped in Canada – it accounts for just one per cent of total commercial foodservice sales, or roughly $382 million – there’s no doubt that Fast Casual is on the rise. Between June 2014 and November 2014, Fast Casual establishments in Canada attracted more than $41 million in new spending. If the rise of this segment is anything like what was witnessed in the United States, it will soon be a major force here in Canada.  According to NPD ReCount, between 2003 and 2014, the number of Fast Casual restaurants in the U.S grew by 11,000. Indications point to similar impressive growth being likely in Canada.

Double-digit growth forecast

Fast Casual concepts are in an excellent position for growth in Canada and are forecast to grow by 18 per cent over the next five years (NPD’s 2020Vision Report – “Future of QSR”). Today’s marketplace is showing limited growth in other segments, so it appears that Fast Casual’s future growth will come at the expense of traffic to other concepts.

Some of that growth will come from full-service (FSR) customers trading down their total bill size for a quicker experience at Fast Casual. But the lion’s share of that growth will be generated by QSR customers trading up to Fast Casual. The stage is set for a true “battle for market share,” and all industry players will need to be armed and ready to take on this formidable competitor – and that’s just to maintain one’s current position. For restaurant operators it will be a competitive threat; for manufacturers, it represents a dynamic new avenue for growth.

Making room for the competition

They say that imitation is the sincerest form of flattery, and we can expect to see other segments of the industry duplicate what has made Fast Casual so successful. QSRs can’t compete with Fast Casuals without “upscaling” their current menu offerings. That means new, premium products, healthier options and innovative flavour profiles.

But it’s not just about product. Fast Casuals are, generally, about an elevated atmosphere, too. QSR operators will need to consider restaurant design as well – from layout to lighting. The quick-service restaurants that will do well over the next five years will be those that spend the time and money to upgrade their interiors and fine-tune the atmosphere within their outlets. NPD studies of customer satisfaction trends show a clear correlation: the right atmosphere drives customer satisfaction scores!

Customer satisfaction trends

The attributes that define Fast Casual – perceived freshness, enhanced food quality and more service – are where customers give the segment their highest satisfaction ratings. This indicates that Fast Casual is meeting customer expectations when it comes to food quality, service and atmosphere.

How they compare

Even with its high-quality positioning, Fast Casual is vulnerable because of the higher average check size. QSR clearly holds a competitive advantage over Fast Casual when it comes to the cost of a meal.  At the other end of the spectrum, casual dining has been promoting lower-priced menu options to compete more aggressively with Fast Casual. For all restaurant operators outside of the Fast Casual arena, there is an opportunity to focus on providing quality products and service at a low price.

Attracting the millennials

Millennials – those consumers between 18 to 34 years of age – will soon overtake Baby Boomers as the most sought-after target for restaurateurs. Even though roughly half of Millennials are students, they are strong drivers of growth in the Fast Casual segment.  Their contribution to U.S. Fast Casual sales in 2014 was a whopping 35 per cent, up by 16 per cent since 2007. They also spend more per visit – an average of $7.99 at Fast Casual, $2.00 more than they spend when visiting a traditional QSR.

As the Fast Casual concept grows, so do opportunities for manufacturers. To do well, products will need to be compatible with those already popular or growing in popularity at existing Fast Casual chains. Despite the popularity of healthy options, a diverse range of products will be required. Consumers appear to appreciate the choices they are able to make when visiting a Fast Casual chain.

Currently, alcohol is not high on the radar screen at Fast Casual outlets. However, it is definitely not out of the realm of possibility with these concepts.  In the U.S., more and more Fast Casual concepts are serving alcohol. While not widespread, service of alcohol is on the rise and represents an opportunity to further develop Fast Casual menus. It’s the perfect pairing: an elevated atmosphere that encourages group dining, along with quality, craveable products just crying out for a craft beer or a “big red” wine.

Fast Casual represents a sizeable opportunity for manufacturers’ food and beverage offerings as they continue to capture a greater share of the market. However, it is a two-way street that manufacturers will need to drive carefully. Opportunity will exist among these growing concepts, but at the same time,  current key accounts will be looking for assistance to counter the competitive threat posed by Fast Casual.

In summary

Is there a promising future for Fast Casual in Canada? Absolutely.

The concept meets the needs of consumers by delivering great-tasting food – prepared the way they like it – in an atmosphere that’s new and exciting. Furthermore, the core user demographic, the Millennials, is forecast to have an ever-growing presence in this segment in the next few years.

However, it won’t all be smooth sailing for Fast Casual. Other segments will serve up strong competition aimed at Millennial consumers, and QSRs in particular can be expected to fight back with new-and-improved menus and interiors.

While relatively new, it’s clear that Fast Casual has earned its place in the industry and is here to stay. Competitors looking to do well and manufacturers looking for growth opportunities would be smart to follow Fast Casual’s every move.

See also:

About the author:

Mark Dempsey is Director, Foodservice Canada for The NPD Group. The NPD Group has more than 25 years of experience providing reliable and comprehensive consumer-based market information and insights to leaders in the foodservice industry. For more information, visit or contact Mark at

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