The battle for customers waged between fast-casual and quick-service restaurants proved about as noncompetitive last year as Sunday's Super Bowl. Fast casual won. Again.
Full-year data from The NPD Group survey reveal that customer traffic at fast-casual restaurants (such as Chipotle, Smashburger or Panera Bread) increased 8 percent in 2013 (12 months ending November). Meanwhile, the total restaurant industry and the quick-service (QSR) sector (McDonald's, KFC) were both shut out with zero percent gains. QSRs had been up 1 percent through September but had a bad Q4 as McDonald's and others have reported. Full-service, casual dining (including Red Lobster) and midscale/family segments (such as Denny's) haven't experienced positive growth in customer traffic for several years.
Rubbing it in, fast-casual restaurants saw a 10 percent increase in customer spending while the restaurant industry overall could muster just a 2 percent gain. Fast-casual checks averaged $7.30 in 2013 while spending at QSRs averaged $5.30, according to NPD's CREST research. NPD tells BurgerBusiness.com that the average QSR burger check was $5.06 in 2013 (up from $4.95 a year earlier). Those compare with an average check at full-service restaurants of $13.66, which helps explain why many full-service concepts are struggling or reducing prices.
"Overall, restaurant customers are trading down, foregoing some of their visits to full service places while increasing the number of visits made to fast casual restaurants," says NPD restaurant analyst Bonnie Riggs. "Fast-casual concepts are capturing market traffic share by meeting consumers' expectations, while midscale and casual dining places continue to lose share.
The number of fast-casual chain units increased 6 percent in 2013 to 16,215, NPD reports.
The burger category continues to see a shift of customer traffic away from quick-service to fast-casual burger bars and chains such as Smashburger, Elevation Burger, BurgerFi (above), Burger 21 and many others. Last month, McDonald's Corp. CEO Don Thompson acknowledged that some higher-income customers are leaving QSRs for fast-casual alternatives. "If we look in the U.S. particularly, one of the things that we see today is a bit of a bifurcation on a consumer base," Thompson said in a conference call with analysts. "So some of the fast casuals are performing a bit better and customers are skewing that way a little bit more as a result of a bit more discretionary income and that economic class of individuals."
In 2013, Technomic reported that more than half of consumers (51 percent) said they consume a burger from a fast-casual restaurant once a month or more. That was up from 43 percent in 2011.
NPD previously forecast brighter results for the industry this year, predicting a 1 percent rise in visits and spending gain of 3 percent by the end of next year. The QSR categories of gourmet coffee and doughnut, as well as the fast-casual category are forecast to do best this year.