Findings from Technomic Inc.'s recently released Top 250 Fast-Casual Chain Restaurant Report indicate that despite industry-leading growth, the fast-casual segment is not immune to the challenging operating conditions facing the broader restaurant marketplace. 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. A key factor contributing to the slowing sales growth trend is decelerating unit development within the segment, which registered at 8.9% in 2016, following a rate of 9.6% unit growth in 2015.
From a chain-level perspective, the struggles of Chipotle had a substantial impact on the overall performance of the Top 250, as the second-largest fast-casual chain saw its sales drop by more than 13% in 2016. 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%. Look for specialty and health-focused concepts to continue to shine and move up the rankings over the coming years as chains like Sweetgreen, Modern Market and Lemonade expand their location presence and attract increasingly health-conscious consumers.
"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 at 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."
Technomic's Top 250 Fast-Casual Chain Restaurant Report, now available for purchase, provides comprehensive coverage of the fast-casual industry with chain rankings by sales volume and unit count, key industry trends and themes, growth-chain spotlights, and more.
The report is available for purchase here.
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