Fast-casual segment influences restaurant industry

Fast-casual segment influences restaurant industry

 
February 8, 2012 | By Lisa Jennings
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 lisa.jennings@penton.com.

Whole Foods not starving for sales, earnings

 
February 9, 2012
AUSTIN, Texas — While food discounters may be thriving in this down economy, things aren’t so bad at the other end of the spectrum. Whole Foods Market reported that sales for its first quarter ended Jan. 15 increased 13% to $3.4 billion, and comparable-store sales increased 8.7%. Identical-store sales, excluding six relocations and two expansions, increased 8.2%, or 17.3% on a two-year stacked basis.The company also posted a whopping 33% increase in net income to $118.3 million. Diluted earnings per share increased 28% to 65 cents.

“We continue to execute at a high level, delivering a great shopping experience for our customers while delivering great returns to our shareholders,” said Walter Robb, co-CEO of Whole Foods Market. “This quarter we produced a 28% increase in earnings on a 13% increase in sales. We are pleased with our sales momentum and are confident we will continue to leverage our sales to the bottom line as reflected in our increased operating margin and earnings outlook for the year.”

Whole Foods opened six stores in the first quarter and expects to open three stores in the second quarter. The company currently has 317 stores totaling approximately 12.1 million sq. ft.

For fiscal 2012, Whole Foods expects sales to increase between 13.5% and 15%, and comparable-store sales to increase between 7.3% and 8.8%. Identical-store sales are expected to increase between 7% and 8.5%.

For the full year, the company is expecting earnings per diluted share $2.28 to $2.32