By Mindy Armstrong, Insights Manager, Food IQ
There was time when the segments in foodservice were clearly defined. Each segment served a different need. But then things shifted. Foodservice consumers started to become more specific about what they wanted to get with their food dollar. A better burger. Better condiments. Better fries. Hence, fast casual emerged and foodservice was changed. All because consumers wanted a higher level of food quality, but still wanted it prepared quickly.
Although the marketplace has been moving in this direction for the last 5 years, there has never been more evidence of the shift than there is now. When the fast casual segment initially emerged, the differences between fast casual and quick service restaurants were still clearly defined. But as competition has become more fierce, we have seen existing concepts adapt and learn from this new segment. From the launch of food trucks from QSR brands to more elevated menu options, the line between the two segments couldn’t be more blurred.
One reason for the blur is directly related to time. As fast casual took off like a rocket, others have been able to observe and gain insight from their success. This has developed into real pressure for the segment as casual dining chains “downscaled” to grab this set of consumers and quick service chains “upscaled” for the same reason.
One recent example is Burger Works from Red Robin, which plans to open their third unit Memorial Day weekend. Burger Works is a fast casual concept and concentrates on offering Red Robin’s signature burger line at a lower price point, on a simpler menu, and in a more casual setting. On the flip side, QSRs are revamping their offerings and décor in an attempt to provide value beyond low prices to regain market share. For instance, McDonald’s just opened its first location under the Metro McDonald’s banner in downtown Las Vegas. According to Mintel Menu Insights, it boasts 24-hour service, digital menu boards and WiFi access, along with a contemporary-looking interior that is bright, with sleek furniture and graffiti-like murals.
Burger King comes at the competition from another angle: sampling. They are launching the biggest sampling campaign in their history, offering free samples of new menu items, including chicken strips, sauces, smoothies, frappes and a chicken salad. This menu launch is clearly in direct competition with their fellow QSR chains, but they are approaching it with a marketing tactic that is underutilized in foodservice, especially in QSR. In addition to the free samples offered in-store, they will hit the streets with 30 branded food trucks and will visit 40 cities nationwide.
The second reason for the blur is the most obvious: better food. As casual dining chains compete through opening their own versions within the segment and QSR chains compete through improved spaces and marketing approaches, we are also seeing traditional quick service chains going head-to-head with fast casual concepts by introducing better food. For instance, Wendy’s recently announced three new Signature Sides—macaroni and cheese, baked sweet potatoes and chili cheese fries—at its U.S. locations. Wendy’s, through recent menu additions and news, has started to separate itself from QSR competitors and has instead focused efforts on moving closer to a fast casual brand. As part of that effort, they have also made attempts to play in the snacking occasion, a daypart that fast casual has struggled to capture. Recent successes with these types of menu items have been seen by fast casual players—Panera with their macaroni and cheese and Burgerville with their chili cheese fries and baked sweet potatoes—but have not been successfully launched at QSR chains.
However, regardless of the success of fast casual in the short time frame that they have been part of the foodservice terrain, QSR still dominates in sheer traffic percentages. This is, of course, due to pure numbers. Fast Casual has outpaced the industry in terms of growth, but isn’t nearly the same size of the QSR segment, in sales or units.
The news that Fast Casual as a segment and concept has shaken the foodservice industry is as evident now as ever. The ability and aspiration to deliver against a consumer need for made-to-order options, customization and fresh, high-quality ingredients has been met. As a result of this "shake-up," QSR chains have improved. As a whole, their menus have gotten better, the food is of a higher quality and the face of value has been redefined. From one perspective, consumers can thank the pioneers of the fast casual segment for forcing this shift, and as a result, blurring the lines for us. On the other hand, QSR chains will need to maintain their forward-thinking mentality and focus on innovation if they intend to remain on top as competition from fast casual continues to heat up.
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