Fast Casual Restaurants and Food Halls
by Charlene Capps, July 31, 2019
Restaurant sales increased by 2.9% for the month of June year over year and recorded a 4% rise in transactions. Retail also saw strong growth reporting a 3.8% increase year-over-year in June.
The fast casual sector made up most of the restaurant industry’s unit growth as it expanded into more markets. Year-over-year the sector has seen a slight decrease in growth, but it is nowhere near reaching saturation. According to Technomic’s Top 500 Chain Restaurant Report, fast casual generated $42.2 billion in total U.S. sales in 2018, an increase of 8% vs the prior year. In 2017, they reported a growth of 8.6%. Fast casual chains emerged more than a decade ago with the promise of higher quality food in a limited service format. 1,569 restaurant units (from the Top 500 Chain Restaurant Report) were added in 2019, and the fast-casual sector alone added more than 1,200 locations. To sum it up, 76% of all new restaurants were fast casual.
To sum it up, 76% of all new restaurants were fast casual.
Fast-causal leads the industry’s growth in sales and in units, but new concepts are also trending such as restaurants in mix use spaces. In 2016 there were roughly 120 food halls across the U.S. By the end of 2020, there will be 450 food halls, quadrupling 2016’s number in 4 years. This is really allowing more restaurants to try out new, innovative concepts because full-scale restaurants are facing rising labor and overhead costs and slim average profit margin of 6.2%. Food halls are most likely to thrive if they are part of a mixed-use development with retail, restaurants, co-working spaces all in one convenient location for consumers.
Food halls are neither trend nor fad; rather, food halls are the result of an evolution in the culture of dining out.
“Food halls are neither trend nor fad; rather, food halls are the result of an evolution in the culture of dining out. Taking cues from the ‘sharing’ economy, food halls offer communal fast casual dining experiences to consumers, while providing restaurateurs economies of scale unachievable on their own,” said Trip Schneck, managing partner of Colicchio Consulting.
Although fast casual is only 9% of the restaurant business, it is disrupting the industry by adding pressure to full service and quick service restaurants. Full service wants to be more efficient with time and creative, while quick service wants to promote fresh and innovative menu trends.