Fast Casual: Who’s on Top?

What is Fast Casual?

Within the restaurant industry, the fast casual market is the fastest growing sub-segment with sales estimated at $15 billion. The term fast casual is associated with consumers “trading-up” from quick service restaurants (i.e. Wendy’s, McDonald’s, Burger King) and “trading down from casual dining restaurants (i.e. Outback Steakhouse, Applebee’s). Focus is placed on high quality food, freshness, atmosphere and most importantly speed. It is fresh food prepared in minutes.

Who Dominates the Market?

With both companies generating more than $1 billion each in annual sales, Panera Bread and Chipotle Mexican Grill are the two biggest names that are consistently in the front news headlines. Both concepts focus on fresh fast foods set in a modern dining atmosphere.

Chipotle Mexican Grill

One of the most publicized restaurants news came in 1998 when McDonald’s made an equity investment in Chipotle to become its majority shareholder. Using McDonald’s experience and expertise in the fast food industry, Chipotle was rapidly formed into a powerful brand. In 2006, McDonald’s sold their shares leaving Chipotle to grow on its own which it has proven it can. Today, Chipotle operates 704 restaurants in 34 states and employs a total of 18,800 employees. In 2007, the company opened 127 new restaurants while up to 140 units are planned to open by the end of 2008.

Chipotle menu offers tacos, burritos, salads and burrito bowls (a burrito without the tortilla) all which are fully customizable by the customer. Service is fast in which some locations are known to serve more than 300 customers per hour. However, customers still select what they want and how they want it by speaking directly to the staff. Chipotle’s vision is to change the way the world thinks about and eats fast food.

Positive news for Chipotle continues as both revenue and net income has increased each year. From 2003 to 2007, revenue increased by 244%.

Total Revenue
December 31,

2007

December 31,

2006

December 31,

2005

December 31,

2004

December 31,

2003

$1,085,782,000 $822,930,000 $627,695,000 $470,721,000 $315,520,000

Panera Bread

Panera’s menu is broken down into three main components; Fresh Baked Goods, Made-to-Order Sandwiches and Custom Roasted Coffees. Fresh baked goods include a variety of in-house baked breads, bagels, muffins, scones and sweets. Made-to-order sandwiches are made on the bakery’s freshly baked bread while coffees include signature hot or cold espresso and cappuccino drinks.

Panera Bread operates 1,230 bakery cafés in 40 states and employs 7800 full-time workers. In 2007, the company opened 169 bakery cafés, 89 of them which were company owned and 80 which were franchise operated.

Although annual net income was slightly down in 2007, total revenue continued to grow. From 2003 to 2007, the company increased its revenue by 193%

Total Revenue
December 25,

2007

December 26,

2006

December 27,

2005

December 25,

2004

December 27

2003

$1,066,691,000 $828,971,000 $640,275,000 $479,139,000 $363,702,000

Who else is in the Top 10?

The following Top 10 Fast Casual concepts for 2007 include:

  1. Chipotle Mexican Grill
  2. Panera Bread
  3. Qdoba Mexican Grill
  4. Buffalo Wild Wings
  5. Camille’s Sidewalk Café
  6. McAlister’s Deli
  7. Salad Works
  8. Bruegger’s
  9. Moe’s Southwest Grill
  10. Pinkberry

I want to be part of Chipotle and Panera. Do they franchise?

Unfortunately, franchise options are available only for Panera but require significant capital. Franchise developers are required to open 15 units over a period of 6 years.

Chipotle and Panera are proven concepts that should remain strong for years to come. These fast casual concepts meet the growing consumers’ need for a quick healthy alternative to traditional fast food.

Photograph by: The Consumerist

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2 Responses to “Fast Casual: Who’s on Top?”

  1. FoodServiceNinja Says:

    you didnt mention PeiWei which is a subbrand chain of PFChang-food is made to order in an open kitchen. If you sit in there and watch it operate they have the efficiency thing down to a T. No clue to their sales tho.

    Didnt realize McD’s sold their Chipotle stock must have been when their stock was in the toilet not long ago.

    I like their food but I find their pro environ theme grating given the way they use excess materials to decorate their places like the tall tops to their trash cans, they over plenty of single serve bottled bevs rather than fountain drinks. The tshirts they have their emps were are cool too.

  2. TheRestaurantBlogger Says:

    Indeed PeiWei has been a highly recognized brand ever since P.F. Chang launched the concept. However, the past year including this year’s same store sales have continued to drop. As of last year the company had reduced the number of stores planned to open for 2008 due to increased costs. With the unexpected poor results of their sub-par concept Taneko Japanese Tavern, this also affected the company. Even though PeiWei has remained popular and is still considered highly successful, it was not named in the Top 10 Fast Casual restaurants for 2007.

    I had the opportunity to try PeiWei a couple years ago in Minnesota. I agree the restaurant is run very efficiently. However, I did not enjoy the food as much because maybe i had such high expectations due to hearing so much about the concept. However, it was still interesting to go see how they operate.

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