As defined by Wikipedia, a fast casual restaurant does not offer full table service, but promises higher quality food than other fast food restaurants. Positioned between fast food and table service dining, fast casual consists of counter service, upscale ambiance, and fresher ingredients. This concept has been championed by major players like, Qdoba, Five Guys, Firehouse Subs, Panera Bread, WingStop, Chipotle, among many others.
To quantify its popularity, Franchise Help reported that since 1999 fast casual has grown 500%, exemplifying its disruption in the dormant food industry. What makes fast casual so unique is its position in the market – in that it only accounts for 7.7% market share. As a result of high growth and a small market share, the industry is ripe for opportunity yet vulnerable to shifts in customer demand.
While some fast-casual restaurants have suffered in the face of increasing competition, others are fast-growing and tout huge profits. What best practices can we draw from these success stories?
1. Recognizing Customer Demand
Above all, consumers want convenience. Enabled through technology, restaurants can offer their customers a seamless experience, in-store, and online. Through online ordering, mobile app ordering, and Self-Service Kiosks, technology allows restaurants to service a population on the move.
Building customer experience is just the start of it, and WingStop illustrates how staying abreast of consumer demand improved their bottom line. They found that online orders were usually $4 higher than the typical tab. By pushing a digital pre ordering takeout platform for customers they were able to provide a seamless experience to their customers and tally up more dollars per order doing so.
The largest consumer demographic is shifting, and so are their demands. Customers are calling for healthier foods and transparent ingredient labeling, all with an expectation of fast service. Ranked the most profitable fast casual restaurant at $4.8 billion in annual US sales, Panera attributes its success to a healthier menu change. Recognizing the shift to eat healthier, they stripped all the recipes of additives and reinvented their brand as fast casual.
2. Building Brand Loyalty
Cheap menu items and unbeatable service have been key ingredients for increasing customer retention rates for the fast food sector. This creates a unique challenge for fast casual, as they sit in the middle of price and service. In order to increase retention rates, fast casual restaurants can deploy loyalty programs and turn diners into regulars.
For example, Firehouse Subs invested in tech and added mobile pay and a loyalty program to its app. By deploying a loyalty program online, on your app, and in-store, your tech savvy diners are much more likely to redeem rewards and engage with the brand more frequently.
3. Optimizing Price Structure
Franchise Help notes that the average fast food check is $5, and the average fast casual check is $12. The positive correlation between quality ingredients and consumers’ quality of life is deeply recognized by the fast casual customer base. Thus, pricing can be more flexible because consumers are less price sensitive when they know they’re getting an improved experience.
It’s all about value proposition to the customer, and that will differ from restaurant to restaurant. Qdoba said that a major reason, for its success, was the switch to all-inclusive pricing as opposed to a la carte pricing. This pricing model differentiated them from its competitors and spearheaded a successful customer advocacy campaign, #FreeYourFlavor. To hit the pricing sweet spot it may involve some trial and error. With an intelligent Point of Sale platform, you can be sure that you will never be out of sync with your current pricing.
With a restaurant POS platform you can optimize your front of house to cater to the time-sensitive, on the move population all while ensuring your back of house can handle the increased volume.