Restaurants Are Moving Towards a Fast-Casual Model and Why Investors Love It

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Lauren Fernandez

Restaurant industry expert Lauren Fernandez breaks down key trends and forecasts future growth

Restaurants Are Moving Towards a Fast-Casual Model and Why Investors Love ItThe restaurant industry has certainly changed over the past few years, and one trend is that many restaurants are moving towards a fast-casual model. Lauren Fernandez, Founder and CEO of full courseis a restaurant and beverage industry veteran and offers her expertise to help decipher why this trend is important to the future of the restaurant industry.

“Our restaurants have certainly taken a lot of hits over the past few years,” explains Fernandez. “The COVID-19 pandemic has presented hurdles that our restaurants must continue to overcome. Because of this, they want to be smarter and contribute to their overall guest experience in the best possible way.”

This fast casual segment is defined by factors such as freshly prepared, higher quality food served with reduced or no table service. In 2021, same-store growth in the fast-casual segment outpaced all other foodservice categories, including family dining, casual dining, quick service and upscale casual dining.

The top eight reasons why restaurants are switching to a fast-casual model are:

  1. There is better flexibility in execution.
    The fast-casual segment optimizes the three highest costs of a restaurant: food, labor and rent. Broader menu offerings meet changing consumer tastes faster, and better ingredients allow for healthier options at competitive prices.
  2. A flexible working model will be introduced.
    Counters and limited service mean less need for front-of-house staff. Counter service cuts labor costs — on average 30% or more of restaurant costs — and can make staffing more manageable, especially in times of crisis.
  3. Operators can run multiple daypart segments.
    Fast-casual restaurants can span multiple segments of the day to capture sales and efficiently utilize existing overheads.
  4. Casual dining is better suited to off-premises sales.
    Whether it’s a catering program or third-party delivery, limited-service, fast-casual concepts are more easily adapted for off-premises sales. In this digital age, consumers expect these offers as part of brand positioning.
  5. Fast casual plays better with consumer goods.
    Brand loyalty can be extended to consumer product lines. This can include, for example, sauces or condiments, which can be found in either an in-person dining experience, take-out or delivery, expanding the ability to reach customers.
  6. Cheaper to open, with better payback periods.
    Some fast-casual units have a build cost of less than $500,000. Owners receive a return on investment on new units, often with payback periods of less than three years.
  7. Solid top line sales with good flow through to bottom line.
    Average revenue is $1.4 million with a 17% profit margin. This lays a solid foundation for restaurants to grow faster and build their brand.
  8. Fast casual is less vulnerable to economic contractions.
    Customers with lower purchasing power will historically switch to fast casual rather than not eating out at all.

“In the end, the right elements have to be in place to make a restaurant successful and ultimately scalable,” says Fernandez. “The fast-casual model prepares restaurants for growth. With fewer floor plan restrictions, this format can be adapted to a variety of property locations, and this flexibility suits multiple revenue channels. The financial returns in this segment support the opportunity.”

About Full Course

Full Course is a restaurant investment and development group transforming the way new businesses grow their brands. The company works with restaurants in the early stages of development, helping them tell their stories by streamlining operations, developing strategies for sustainable growth, and matching owners or chefs with the right investors or franchise partners. Lauren Fernandez, Founder and CEO of Full Course, has spent nearly 20 years in the food and beverage industry, first as General Counsel and Head of Franchise Administration for a large corporation with more than 4,000 restaurants in over 15 countries and then as the operator of a successful restaurant group . Fernandez was recently featured in the Nation’s Restaurant News service list. By providing front-end support and expertise to emerging restaurant brands, Full Course creates a strong growth foundation for them and their potential investors to successfully pursue their dreams. Learn more at www.fullcourse.com.

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