Wednesday, March 22, 2023
HomerestaurantsThe booming restaurant segment that’s eating rivals’ lunch

The booming restaurant segment that’s eating rivals’ lunch

The restaurant business is a tough one—that is, unless you're a fast-casual operator, according to a new report from The NPD Group.

Though the overall industry has struggled since the recession, fast casual—associated with higher-quality food and enhanced service, such as Chipotle Mexican Grill and Noodles & Co.—remains the bright spot.

"There are very few segments in the industry that are growing," said NPD restaurant analyst Bonnie Riggs. "The few that are would be fast casual, gourmet coffee and tea, the doughnut industry and Mexican restaurants," she said, adding that increased business travel has fueled a rise in fine dining.

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For the 12 months ending in November, visits to fast-casual restaurants rose 8 percent. Spending jumped 10 percent, versus 2 percent overall. Traffic was flat in the overall industry and in fast food.

While the fast-casual segment is getting business from all age groups, millennials are especially drawn to it.

Goldman Sachs noted in a recent report that more business from that group correlates with robust same-store sales.

"Some of this can be explained by life stage, but we believe some relates to evolving consumer preferences, and those consumers who establish these habits early on will maintain some as their disposable income rises," Goldman analysts said.

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The marked growth suggests that fast-casual restaurants are stealing share from other segments as diners trade down from full service and up from fast food, said Riggs at NPD.


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