The fast-casual industry emerged a decade ago with innovation as its calling card. But in a post-pandemic world in which all brands must innovate or risk becoming irrelevant, the category is working to reestablish itself as an innovative force.
To do so, fast-casual operators have rolled out innovations that enhance their omnichannel and personalization capabilities, positioning them well for ongoing success, according to industry leaders. These innovations, in many cases accelerated by the pandemic, include investments in mobile ordering and payment, upgraded loyalty programs, data analytics and other tools that are helping operators in the segment remain competitive with their quick-service rivals.
At Riverside, Calif.-based Farmer Boys, for example, the breakfast-and-burgers chain has been testing mobile ordering capabilities in about 10 units, with plans to roll it out systemwide early next year.
“Every indication is that our guests love the convenience — both the convenience of ordering and the ability to pay online,” Dave Wetzel, president and chief operating office of Farmer Boys, told Nation’s Restaurant News. “The testing is going very well.”
The mobile capabilities have improved order accuracy by cutting down on phone orders, he said, and are helping the chain enhance its accessibility and convenience for its customers.
In addition to the mobile ordering and payment test, Farmer Boys also rolled out new technologies in its drive-thru lanes, including headsets for order-takers, that have improved service levels and smoothed kitchen operations, Wetzel said. The chain also consolidated its third-party delivery orders into a single platform integrated into its point-of-sale system.
“What we were trying to do really is create a more streamlined and seamless delivery experience,” said Wetzel.
Similarly, Hoots Wings, the fast-casual brand owned by Hooters parent company HOA Brands, has invested both in technology that seeks to provide a better customer experience and in back-of-the house solutions that support its success on third-party delivery platforms.
“When the customer is searching for ‘wings’ in a market, to have Hoots Wings or Hooters pop up at the top of the app or the top of the page, that's where the rubber meets the road,” said Sal Melilli, president and CEO of HOA Brands.
Implementing systems that send these orders from delivery providers’ apps directly to the kitchen has also provided a significant boost in terms of operational efficiencies, Melilli said.
On the consumer-facing side, Hoots has focused on continually upgrading and enhancing its mobile app to ensure a positive customer experience. Customer engagement and speed of service will be essential to success going forward, he said.
“Those are the things we have to continue to build on in order to make sure we're competitive, because the consumer's going to demand it,” Melilli said.
Blaze Pizza, meanwhile, is seeking to take the personalized in-store ordering system it is known for and translate it into its mobile app, said Vince Szwajkowski, chief marketing officer at the Pasadena, Calif.-based chain.
The company rolled out a new mobile app in September that aims to make the pizza customization process more visual and intuitive for customers, while also facilitating personalized communications, he said. To that end, the company is leveraging the app to message customers individually, such as by making suggestions based on their loyalty points — letting them know when they have earned a free pizza, for example, or listing the options they have for free items they can obtain by redeeming their loyalty points.
“We are thinking about how to drive a more personalized experience in the app and giving them information so they are getting what they want,” Szwajkowski said.
The app also enables suggested orders based past order history, which brings Blaze closer to “one-click” ordering capabilities.
The app has been well-received, he said, citing near-perfect ratings in the app stores, increased downloads and positive direct customer feedback.
Since joining Blaze a little over a year ago, Szwajkowski also evolved the company’s customer relationship management (CRM) solution to drive more personalized communications as well, using data analytics to promote menu items that appeal to certain customers based on order history, for example, rather than the “batch-and-blast” messaging strategy that the company had previously been using.
Data analytics are also helping Blaze in its new product development, he said, citing the company’s observations around consumer interest in spicy flavor profiles that led to product launches such as the Blazin’ Hot Chicken Pizza, made with ghost pepper chicken meatballs, in late 2020.
“We were able to participate in that trend, not because of what everyone else was doing, but because of what we were actually seeing in our data,” Szwajkowski said.
Focus on labor savings
Fast-casual operators overall are moving in the right direction in terms of their technology investments, “but way too slowly,” said Gary Stibel, founder and CEO of the New England Consulting Group.
He said operators need to focus on innovating with technology that minimizes labor and that encourages mobile ordering.
“If the menu is on my mobile device, the likelihood that I will go back to that restaurant is higher, and it gives me the opportunity to order in advance,” he said.
The personalization capabilities that companies such as Blaze Pizza are focusing on will also be important going forward, Stibel said. While fast-casual operators have historically excelled in the areas of food quality and menu innovation, they have an opportunity to gain ground by elevating the service they provide through personalization.
“Even though the first word is ‘fast,’ the second word in fast casual is ‘casual,’” he said. “Casual means relaxed, and relaxed means personal service.”
Fast-casual operators might also take some cues from the full-service sector and look at what he calls “table service from mobile devices,” or TSMD. This is technology that allows customers to use their mobile devices to request services that normally might have been provided by staff, such as placing orders for additional beverages.
“Guests love it, it’s a good way to save on labor and it makes money,” he said.
Michael Schatzberg, co-managing partner and founder of Branded Strategic Hospitality, which operates several casual-dining restaurants in New York City that have been at the forefront of technological innovation, also believes that labor-saving technologies that enhance service will be key in the restaurant industry across segments.
He said he expects that fast-casual restaurants will expand their omnichannel capabilities to provide convenient solutions for consumers seeking high-quality food quickly, while the casual-dining segment will become increasingly experiential, with liberal use of technology that creates labor efficiencies.
At Branded Strategic’s 5 Napkin Burger, a four-unit chain, the company has used tabletop QR codes for ordering from mobile devices since before the pandemic, for example. And at the company’s Duke’s restaurant on the Upper East Side, the company installed self-service alcoholic beverages using technology that allows customers to sample drinks and pay by the ounce.
Innovations such as these are especially relevant and engaging for younger consumers, he said.
“For restaurants where you go in and order some wings and burgers and a couple of beers, it’s great,” said Schatzberg. “It takes a lot of the pressure off the servers. It allows the staff to focus on more important tasks.”
Wetzel of Farmer Boys agreed that labor costs are one of the key issues facing the industry. While Farmer Boys is confident that its sales will maintain their strong growth momentum going forward, pressure on profitability has increased.
“We're paying much higher wages, and I think rightfully so,” he said. “Looking forward, a lot of our effort will be taking our sales and translating them back into margins. We're rethinking our operating structure. How do we get more efficient at the front counter?”
Operators are mostly bullish on the fast-casual segment, however.
Szwajkowski of Blaze Pizza said that in addition to being optimistic about his own chain’s growth, he sees a lot of opportunity for fast-casual operators to innovate and succeed.
“We’re seeing urban brands that are now trying to become more suburban to give them more opportunities for growth, and there are suburban brands that are now trying to open marquee locations in urban markets to better showcase their brand and give themselves more opportunities,” he said.
In addition, he said he sees room for innovation in the use of ghost kitchens and digital-only dark concepts.
Challenges remain, however, particularly for lunch-focused concepts in business areas where the office population has not fully returned.
“I think lunch will continue to be a challenge — and an opportunity — for fast casual,” Szwajkowski said.