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Fast-casual segment influences restaurant industry

Growth in the fast-casual sector is having a deep impact on the restaurant industry as operators in other segments try to imitate its successful strategies, the NPD Group said Wednesday.

Fast-casual restaurant chains grew their unit counts by double digits over the last three years, according to NPD’s Recount, a biannual census of restaurant unit counts.

Still, the fast-casual segment remains relatively undeveloped, accounting for only about 4 percent of the more than 60 billion visits to all restaurants in the year ending in June 2011, NPD said. By comparison, about 61 percent of those visits were to quick-service restaurants.

Since 2007, however, fast-casual chains also have seen dramatic increases in traffic, while quick-service and casual-dining restaurants have seen minimal increases or declines.

NPD’s “Fast Casual: A Growing Market” report also found that consumer demand for fast-casual dining outpaced the industry’s rate of expansion, and several chains in the segment have built strong customer loyalty.

“Many fast-casual concepts were positioned as a fresh, made-to-order alternative to traditional fast food options, and consumers responded positively,” said Bonnie Riggs, NPD restaurant industry analyst. “The segment benefited from fast-food consumers trading up and full-service consumers trading down.”

As a result, several quick-service chains have begun offering more premium products and healthful options, and upgrading interiors with upscale and modern looks that can compete on a fast-casual level, the NPD report said.

For example, Wendy’s, McDonald’s, Jack in the Box and Burger King have introduced more premium burgers and upgraded menu items in recent years.

Taco Bell is testing a new fast-casual-like chef-inspired menu, and McDonald’s has been re-imaging its units, with 800 scheduled to be remodeled this year.

Riggs said traditional quick-service operators can compete with fast-casual restaurants if they pay attention to consumers’ wants and needs, especially in terms of the freshness and quality of food.

“Fast-casual concepts are in an excellent position for growth, relative to the overall industry,” she said. “However, the same growth opportunities are available to any restaurant operator able to innovate, provide value for money and not just keep up, but surpass competitors.”

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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