Fast-casual unit growth driving increased traffic while restaurant industry sales flat: NPD
Fast casuals are the only segment in the restaurant industry that are growing traffic, says a report from NPD. The Chicago-based research firm has seen traffic grow 6 percent annually over the most recent five years. This measure is a non-comp basis and the growth has come from an increase in store count. According to the NPD Fall 2017 ReCount restaurant census, unit growth approximated 6,000 units, growing from 19,231 units in 2013 to 25,118 units in 2017.
Fast casuals units have grown at a compound annual growth rate of 7 percent, to drive both sales and customer count increases. Not all news is rosy, for fast casuals: In the quarters ending December and this March, traffic had slowed to 4 percent from the 7 percent traffic growth rate reported in the third quarter in 2017.
Total restaurant indutry traffic has been dismal. NPD reports sales remained flat in the 12 months ending May 2018 versus the same prior-year period. Fast-casual restaurants were able to increase traffic by 5 percent. The growth leaders among fast-casual chains included, in terms of customer traffic, included Chipotle, Panera, Panda Express, and Raising Cane’s, notes NPD.
Fast casuals have appealed to consumers with greater disposable income, being most popular with households with incomes of $100K or more. Also, they have appeal with the younger generations, especially those 18-24. Fine causal (fast fine) is an offshoot of fast casual that is not particularly recognized within major media or consumers, but offers more upscale food than the typical fast casual and contains elements of fine dining. NPD calls out this subsegment due to its conduciveness to business meetings and dates, occasions not necessarily captured by the typical fast-casual restaurants.
Despite slowing unit growth, and consequently customer traffic, David Portalatin, NPD food industry advisor’s assessment of fast casual is that it continues to be bright, because it delivers on the attributes customers are seeking—speedy service with a better experience and a higher quality of food. “They offer quick and good service, high quality food, and a pleasant experience,” he says. “It’s really the not-so-secret-sauce of success.”
Photo credit: Panera Bread (featured), Chipotle (inline photo).