Why Fast Casual Is Not The Future Of The Restaurant Business

A new breed of restaurant is fast approaching on the horizon and starting to catch people’s attention. These concepts buck the traditional fast casual model in so many ways that it’s time to create a name for this new segment.

Who are the market leaders in Fast Casual? Despite all the up and comers, three stand apart as the dominant players in the space. Chipotle, Panera Bread, and Five Guys. These three goliaths dominate the market and the consumer’s mindshare when it comes to fast casual, the same way McDonald’s does for QSR.

I’ve heard people at restaurant industry conferences occasionally say things like “fast casual plus” or “premium fast casual” to try and describe this emerging market – but that doesn’t go far enough to capture it’s essence.

I’m officially drawing a line in the sand and calling this new segment FRESH CASUAL. Like Fast Casual before it, which sits definitively closer to the QSR side on the spectrum between QSR and Casual Dining, Fresh Casual sits on the same spectrum – but definitively closer to the casual or in some cases even fine dining side.

In essence, Fast Casual is casual dining quality food served in a QSR environment. Fresh Casual is a full casual dining experience with a limited (usually QSR) service model.

This may seem trivial at first, but the gulf between “Fast Casual” concepts and “Fresh Casual” competitors in the same exact space is so wide that it can no longer be ignored.

Here is how Fast Casual and Fresh Casual stack up on the MAJOR differences in market point (these are general categorizations and I realize that not every restaurant fits each definition perfectly).

Menu

Fast Casual – Customer driven menu. Most commonly featuring a “build your own” style menu where customers choose their protein, starch and flavor.

Fresh Casual – Chef driven menu. The menu is designed by a chef or culinary team to have specific dishes and flavor profiles. Often the menu is designed by a corporate chef and then executed by a kitchen staff in store.

Service Model

Fast Casual – Fast Casual differs little from the QSR service model – having customers order at a counter  and pick their food up there.

Fresh Casual – Fresh Casual retains counter ordering but then adds an additional layer of service –  running food to customers, refilling drinks, and bussing tables.  Once a customer orders at the counter, the rest of their service experience takes place at the table.

Décor & Design

Fast Casual – differs little from a traditional QSR design & décor, very sparse clean interiors, often with promotional materials and posters on the walls.

Fresh Casual – mimics a casual dining interior. Focus on higher quality furniture and fixtures as well as art and artifacts in store to create a relaxing and comfortable atmosphere.

Food Quality

Fast Casual – delivers higher quality than QSR, but still sometimes reheating and using frozen product. Prep and cooking is usually as simplified as possible

Fresh Casual – delivers food consistent with top quality casual or fine dining, often fresh and locally sourced and rarely frozen. More complex prep and cooking is required to deliver a higher quality of food

Platewear

Fast Casual – served with traditional QSR paper and disposable service ware

Fresh Casual – served on plateware and with glass (excluding to-go orders) similar to casual dining

Price Point

The price point is the same for both market segments – $8-12 dollars per meal.

Buildout

The square footage, which obviously varies between concepts, is similar in both Fast and Fresh Casual. Between 1500 and 4000 sq ft in a shopping center.

Now that you’ve got a better sense of this distinction, I want to point out 6 specific examples of the restaurants with the same type of food – currently both considered “fast casual” that are a world apart.

Mexican: Xoco vs. Chipotle

 

If you want to see what the future of restaurants looks like – visit Rick Bayless’s Xoco in Chicago. This beast of a Mexican concept is the most stark example distinguishing Fresh Casual from Fast Casual. As soon as you walk in the door you will realize exactly what I’m talking about (read here my site report on Xoco). Xoco is just on another level compared to Chipotle, Moe’s, or the other fast casual Mexican and burrito players.  The ambiance, the food quality, the service all fit perfectly into the fresh casual mold. The open kitchen showcases the handmade breads as well as the freshly prepared torta and soup. The ambiance is warm and cozy like a sit down restaurant – and after you order from the counter the service model is indistinguishable from top level casual dining.

Asian: Pei Wei vs. Panda Express

Pei Wei, one of the older players in the space, fits the Fresh Casual mold to a tee. It is a full blown casual dining restaurant that simply begins your order at a counter. The look, the feel, the service, the food quality etc all stand apart from a Panda Express (or even Chipotle’s new entry into the market Shop House) to such a degree that you can’t help but put Pei Wei in another category all to itself.

Italian: Vapiano vs. Nooi Pasta

 

Vapiano is a fresh casual Italian concept that hails from Europe. Despite their counter based service model, their food quality is astounding and the ambiance is very much that of casual dining. The cooks hand make pasta daily and boil it to order, pizzas are made from scratch before your eyes. The flavors are bold and delicious and so fresh.  While Fast Casual Italian is still a very young and under-served market, the fledging competitors in the space can’t hold a candle to Vapiano in terms of food quality or ambiance. (Learn more about fast casual Italian.)

Burgers: Shake Shack vs. Five Guys

 

I personal think the burger space is a huge bubble right now and there are too many concepts for all of them to survive. That said, one of the survivors will almost certainly be Danny Meyer’s Shake Shack. Meyer of Setting The Table fame is one of New York’s premier restaurateurs and arguably one of the guys who kicked off the entire “better burger” craze. After building a near empire in NYC’s restaurant scene Meyer finally decide to scale one of his concepts – and he chose Shake Shack. The chef driven deliciousness of Shake Shack is a fresh casual triumph over the build-your-own burgers of Five Guys. The freshness, quality , and flavor of Shake Shack’s food creates an unquestionable gulf between the plethora of fast casual burger joints and the big boys like Shake Shack.

Bakery Cafe: Wildflower vs. Panera Bread

 

Wildflower is a 10,000 ton missile aiming straight for Panera. I first ate here out in Phoenix for the RLC 2012. I had heard several people hyping Wildflower up and I was convinced that there was no way it could live up to the hype. Wrong. Wildflower is a Panera with great food, a full kitchen, a much sexier ambiance, and tremendous customer service. One spicy chipotle egg sandwich or order of pancakes (oh those fluffy, fluffy pancakes) at Wildflower and you will know the difference between Fresh Casual and Fast Casual.

Mediterranean: Taziki’s vs. Garbanzo

 

Ok ok I know,  I put Taziki’s on the list. But at Taziki’s we set out every day to define ourselves as Fresh Casual – to bring a new and better experience to our customers. Taziki’s food is all made completely fresh every day, no freezers and no fryers in the entire store. Our entire menu is designed by our team of chefs to craft delightful, different, and delicious flavor combinations. The décor is soft and inviting like a casual dining restaurant. The service model delivers much more to the customer than a traditional counter model, food is delivered to the customer’s table, drinks are refilled, and the table is bussed for the customer. Similar players in the Mediterranean space like Garbanzo and Roti are both focused on assembly line style build your own menus, with sparse metallic interior and counter only service (essentially replicating Chipotle’s model but replacing the proteins and starches with Mediterranean ones).

See For Yourself

Words can only do this distinction so much justice. Get out in the world and see these concepts for yourself. Eat at one and then the other and you will know exactly what I’m talking about when I say that Fresh Casual is here to stay. After travelling across the country week after week and personally visiting all of these concepts, I can say hands down that Fresh Casual is real and it’s a serious force to be reckoned with.

Next Big Thing For Fast Casual – What’s Up With Italian?

A few weeks ago I ventured up to New York (a forward thinking restaurant town and bastion of great Italian or so I thought) to dig down and learn more about the Fast Casual Italian competition up there and how it stacks up to Fresh Hospitality’s Fast Casual Italian concept Tellini’s.

 I started my research with a concept Chase Gilbert  had recommended to me called Vapiano. Further research uncovered a few more fast casual Italian contenders, but to be honest it wasn’t very easy to find restaurants claiming to be fast casual Italian in NYC. Vapiano (a European import) came up in several of my Google searches, Nooi Pasta To Go (another European import), Hello Pasta dubbed “the next Chipotle” (turns out they went out of business a few months ago) and Cafe Metro which has the most locations in Manhattan out of all the competitors. The gulf between these concepts was massive.

 Vapiano

http://www.vapianointernational.com

 Let me start off my analysis of Vapiano with a bit off their website that I found really relevant:

“Somewhere between the nicest of fast casual and hippest of casual dining restaurants is VAPIANO. Defining the future of fresh casual – a new and refreshing niche in the restaurant industry – Vapiano is an innovative European concept serving made-to-order hand tossed pizzas, fresh, house-made pasta and hand tossed gourmet salads.”

The number one thing that sticks out to me in this paragraph is how Vapiano describes their restaurant as FRESH CASUAL and not FAST CASUAL. I think this is a vital distinction and one that Fresh Hospitality (get it?) needs to start making about all of our brands.

When people in the industry talk about Fast Casual names like Panera Bread, Five Guys, and Chipotle crop up over and over. All of these brands essentially run a fast food service model with a build your own menu and food that is much better quality than fast food. The same thing comes to mind when I look at Garbanzo, Roti, Tokyo Joes and all the other big players in the fast casual space. At the end of the day – Fresh Hospitality’s brands are really on another level – offering completely fresh food (no freezers, no fryers), chef designed and chef driven menus, and a level of table service.

I think positioning Fresh Hospitality as the industry leader in Fresh Casual could not only be a great move in moving into another tier in our customers minds but also a great marketing maneuver for building PR and spreading the word about Fresh Hospitality.

The enormous gulf between Vapiano and the other two restaurants I visited was astonishing and I think it really highlights the differences between fast casual and FRESH CASUAL. Vapiano destroyed the other two restaurants. Their pasta was made fresh (see below for pictures of it being made), boiled to order, the sauce was created in front of your eyes in a pan, the pizza crust was rolled right in front of me – and the food was delicious. The pasta tasted so fresh and flavorful. The pizza was phenomenal.

When I was being greeted by the hostess and informing her that this was my first time at Vapiano – a “raving fan” walking out the door goes “Oh my god – you’re going to LOVE IT it’s SO GOOD.”

A couple other notes on the decor and the service model. They used the Dean & Delucca service model of ordering different things from different stations – this resulted in the entire ordering process being complete chaos. I was neglected for 5 minutes waiting in what may or may not have been the pasta line and even at one point got into an argument with another customer over who was next.

The small saving grace was their use of “Vapiano Cards” that you simply tapped at each station and cashed out upon leaving – at least paying wasn’t as big of a hassle as it is at Dean & Deluca.

They also had mostly community seating available. This is probably a combination of being from Europe originally and also being located in NYC. However, the layout looked great and it worked pretty well.  They also had a full service bar with a wide selection of wines and liquors as part of the draw for increased dinner business. Here are my shots of the store.

Here you can see them making fresh cut pasta. They batched the pasta into plastic “portion” sized containers that they used for cooking.

Shelf of batched pastas (Fresh made that day) – the pasta chef would take one out and plop it into their pasta cooker when a customer selected a particular type of pasta.

 

 

Cafe Metro

http://www.cafemetrony.com/

I found Cafe Metro on my Google search for fast casual Italian spots in New York City. They have a number of locations (10+) in Manhattan and seem to be relatively successful. The food is a combination of soups, salads, sandwiches and made to order pasta. I would say despite the fact that they didn’t serve pizza – the place reminded me of a hybrid Sbarro and Panera Bread – with a dash of New York deli thrown in. Not your typical Italian fast casual but its seen a lot of success in NYC and serves much of the same types of food as Tellinis. They technically refer to themselves as “gourmet fast food.”

The restaurant itself was lackluster – I think it may have actually been a converted Sbarro. It felt very fast food and smelled a bit strange. I ordered a build your own pasta with linguini, red sauce, tomatoes, sausage and onions (see below for a picture). The pasta was okay. It wasn’t tough and chewy but it lacked any real flavor. The soups and sandwiches had clearly been sitting out all day and did not look the least bit appetizing. The pasta presentation looked a bit shabby as well having just eaten at Vapiano. Here are a couple pictures.

Nooi Pasta To Go

http://nooionthego.com/

From my research on fast casual Italian in NYC I came across several articles talking about the two fast casual pasta juggernauts battling it out in NYC. The first was Hello Pasta aka “the next Chipotle” which is now out of business. The second was Nooi.

Quite frankly, I found nothing about Nooi even remotely appealing. The decor was a freakish bright purple with red velvet chairs strewn about. The cooking line looked like it was straight out of a fast food restaurant (I will grant them that the pasta area was clean)- the pasta condiments looked as if they had been sitting there for days. The only other food offering besides pasta was a few salads – clearly not fresh – sitting in the refrigerator at the register. The thing that blew my mind was that they actually did a pretty good job promoting their food as both healthy and fresh using wall space – very similar to Garbanzo (see pictures below).

When I asked the clerk behind the counter if they made the pasta fresh (the pasta was sitting flaccidly in a few jars on the counter) – he first responded “yes look we boil it right here,” when asked about the creation of the noodles themselves he replied “oh no we buy it like that – just like you would get in a store.” He may need to make a visit to Vapiano.

The food was grotesque (I’ll let you see the presentation for yourself below) – the pasta was chewy, hard, and tasted like cardboard. The meatballs were almost cold. I could barely take more than 2 or 3 bites. I won’t say any more about the food because it is making my stomach hurt just thinking about it. The pictures can do the rest of the talking.

The lesson – Nooi is still able to drill the message into their customers that their food is fresh and healthy (I seriously question that it is EITHER). And they do a pretty good job of delivering the message. Check out this wall art.

Here we go – the pasta. This is how it was served to me.

And here is the pasta itself.

Key Takeaways

There are a couple key takeaways from my fast casual Italian research. The single most important takeaway in my mind is the distinction between Fast Casual and Fresh Casual. As Fresh Hospitality we need to think about our marketing and brand strategy more along the lines of defining ourselves as the best-in-class industry leader of the emerging Fresh Casual market segment.

Fast casual is already heavily crowded with success stories and market leaders (Chipotle, Five Guys, Panera, Raving Brands, etc).  In the book The 22 Immutable Laws of Marketing the authors argue that the single most important thing in marketing is being the first in a specific category – and the book goes on to advocate that you create your own category to become first in if you aren’t first in your existing category.

From a PR and branding perspective (and ultimately in the battle for our customer’s mindshare) creating and promoting the category of “Fresh Casual” and being the leaders in this space could be a great move for Fresh Hospitality. It doesn’t hurt that our organization already has Fresh in the name.  A couple other things to note.

  • Focus on super fresh and scratch made ingredients
  • The power of seeing your food being made in front of you, which we have also seen at top Fast (or should I say Fresh) Casual places like Rick Bayless’s Xoco and numerous competitors who have their fresh baked pita coming out while the customers are in line such as Roti and Garbanzo
  • Pasta (specifically Build-Your-Own Pasta) is the focus of the market right now – not only was most of Vapiano’s layout focused on pasta, but the other concepts were primarily centered on pasta as well
  • Vapiano is clearly the leader in this market at the moment
  • A number of European players in the Fast Casual Italian space
  • Fast Casual Italian seems like a relatively underdeveloped market as a whole(difficult to find restaurants calling themselves fast casual Italian even in a major market like NYC)
  • Use of in-your-face wall art talking about how fresh and healthy the food is – even at a place that serves mediocre food that could hardly be considered healthy.

There are a few other emerging players in the Fast Casual Italian space right now – most notably (the one I’ve heard the most buzz about) Piada in Columbus, OH (which I plan on visiting soon).  Very few people are focusing on Italian as a whole – most of the players are either doing Pasta or Pizza. The combo of Pizza, Pasta, Panini, and Salad – combined with a focus on truly fresh made and natural ingredients – could be a huge winner. This is a really under developed market and could present a very big opportunity to grow Tellinis and share our vision for fresh, healthy “Fresh Casual” Italian food with our customers.

Thanks for reading and stay tuned – join in the conversation in the comments and on Twitter!