How QSRs and fast casuals are fighting for market share

July 29, 2014
How QSRs and fast casuals are fighting for market share

By Daniel Campbell,

Research and Development assistant, Food IQ

The battle between commercial segments is as old as the foodservice industry itself, and in recent years, the competition between QSR and Fast Casual has increased and the line between these segments has begun to blur as they fight for the consumer and the opportunity to increase profit. Classic QSR concepts are stepping into the fast casual realm, and vice versa. Let’s take a look at who is making this transition, the reasons behind it, and the benefits of making the switch.

The consumer

The consumer drives every segment within the foodservice industry, and it’s no secret that consumers flock to familiarity. This helps explain why the FC segment is so popular. According to Technomic, about 95 percent of the fast casual market is made up of chains and in 2013 posted an 11 percent sales increase. This means that consumers recognize and identify with a particular brand and the quality of food they receive. Consumers return to fast casual concepts because they feel the food is of higher quality than fast food and the bill is still affordable.

The QSR segment is unique in that it satisfies customers based on speed and accuracy. The food is fast, cheap, and easy to consume on-the-go. During tough economic times, the QSR segment thrives; people don’t want to pay for fast casual food so a run through the drive-thru satisfies their needs. In the early days of foodservice, this line was clear, but QSR’s have had time to study the fast casual segment and have started to “up scale” their menus in an effort to win over the fast casual consumer.

Just as QSR’s are upping their menus, FC’s are working on speed. According to Technomic, those who report increased visits to fast casual locations are more strongly driven by food quality, healthfulness and uniqueness, but factors relating to overall convenience are most often cited as reasons why consumers keep going back to the drive-thru.

In past years, the use of terms like “fresh," “handmade” and even “gluten-free” were exclusive to fast casual concepts. But that is no longer the case. Wendy’s now refers to their salads as “fresh-made," Einstein Bros Bagel offers a “thintastic bagel” and even Domino’s is offering a gluten-free crust option. Susan Sheilds, CIO of Jamba Juice put it best when she said, “In terms of health and wellness, we definitely think this trend is going to stay; it’s not a fad…We are really understanding the correlation between diet and health.

The switch

So which QSR’s are making the big switch? Taco Bell recently announced its emergence into the fast casual world with US Taco Co. and Urban Tap Room. With a simple lineup of 10 premium tacos, thick-cut fries, and shakes, a consumer who may rarely visit Taco Bell may in fact spend their dollars at the grownup, sister version of the restaurant. Reports indicate that future locations of the US Taco Co. will also include a menu of craft beer and wine.

Although not a complete switch, a McDonald’s location in downtown Las Vegas has incorporated 24-hour service, digital menu boards, Wifi access, and a contemporary-looking interior complete with sleek furniture and graffiti-like artwork to entice hungry tourists and make them re-think the famous fast-food giant.

KFC launched KFC Eleven in August of 2013 with a menu including global flavors, flatbreads, salads, and rice bowls that are available in flavors like Sweet Orange Ginger, Caribbean Tango, and Southwestern Baja. Each item can be made with grilled or fried chicken. Even the famous mashed potatoes have been given an upgrade: they are now “garlic smashed potatoes and gravy.”

QSR’s aren’t the only ones making changes, however. Technomic’s Darren Tristano recently discussed the incorporation of express units for chains like IHOP and Denny’s to “save costs and grow saturation.” Chains like Panera Bread and Chipotle have begun testing and launching online ordering apps and drive-thrus to help speed up service and amp up convenience for their consumers.

The consistent factor in each of these restaurant transformations? Innovation.

Blurring lines

The QSR segment rules with patrons who visit more than once a week at 39 percent compared to FC’s 19 percent, but in Technomic’s recently published Future of LSR: Fast-Food & Fast-Casual Restaurant Consumer Trend Report, any limited-service concept that caters to a “variety of needs and occasions” will likely be successful.

It can be argued that consumer attitudes have shifted towards more unique menu items that are made of higher-quality ingredients with a bit of focus on health. Speed and convenience are being explored by FC’s and menu innovation is part of the everyday repertoire of QSRs. It all starts with understanding your consumer. From there, being aware of what the next generation of chefs are pushing will provide the inspiration needed within both segments and will revolutionize menu offerings.  

Daniel Campbell is a culinary innovator on the Food IQ culinary team.

Photo provided by Wikimedia.


Topics: Food & Beverage, Trends / Statistics


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