CHICAGO -- For the second consecutive year, fast-casual chains in Technomic’s Top 250 ranking show a trend of decelerating sales and unit growth. While the fast-casual segment is still the restaurant industry’s growth leader, there are signs that a sustained slowdown is happening.
Findings from Technomic’s recently released Top 250 Fast-Casual Chain Restaurant Report indicate that the industry’s star segment is not immune to the challenging operating conditions—including ever-increasing competition from higher-quality convenience-store foodservice programs—that have been facing the larger restaurant marketplace.
Click through to uncover a few key reasons for fast casual’s slight downturn, and the fast-casual categories that remain bright spots for the category …
1. Sales are slowing
Technomic’s annual report reveals that the Top 250 fast-casual chains grew sales a cumulative 8.4% in 2016 to a total of $40.4 billion.
While this growth significantly outpaces other industry segments, it lags compared to the 11.9% sales growth in 2015 and 13.8% growth in 2014.
4. Which brands are strong performers?
Helping to push the segment in a positive direction, however, were leading chains Panda Express, Jimmy John’s and Zaxby’s, which all saw double-digit growth and operate with annual sales volumes well over $1 billion.
The fast-casual pizza segment continues to be a growth engine as well, with the menu category increasing its sales at a cumulative rate of 35%.
5. The outlook for fast casual
According to Technomic, fast-casual chains can gain a competitive edge by underscoring uniqueness, both on the menu and for service amenities.
“As the overall chain restaurant marketplace tightens and the fast-casual segment slowly moves toward a point of maturity, it will become increasingly important for chains to differentiate themselves and stand out in a crowded playing field,” writes Kevin Schimpf, industry research manager for Technomic. “Look for chains to engineer success by reaching further into the breakfast daypart, spotlighting novelty menu offerings to generate customer interest, and by embracing the off-premise market and making smart investments in ordering technology.”