Canadian Pizza Magazine

News
Emerging fast-casual category captures 6% of QSR


April 22, 2014
By Canadian Pizza

April 22, 2014, Toronto – There is a new
category in the Canadian foodservice industry predicted to give quick-service
and full-service restaurants (QSRs and FSRs) a run for their money, says a
recent study by the NPD Group.

April 22, 2014, Toronto – There is a new
category in the Canadian foodservice industry predicted to give quick-service
and full-service restaurants (QSRs and FSRs) a run for their money, says a
recent study by the NPD Group.

While still relatively underdeveloped in
comparison to the American market, “fast casuals” – those restaurants
considered to be upscale QSRs with offers of more attentive service and higher
food quality – are beginning to stir the pot. Making significant inroads since
2011, fast casuals average a larger cheque size than traditional fast-food
restaurants and in a relatively short time, are stealing market share by
capturing six per cent of all QSR visits in Canada.

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According to a recent study on the subject
by the NPD Group, the new category is compelling consumers to choose between
food freshness / menu variety and speedy service / value pricing. Though fast
casuals and QSRs share convenience as a number 1 traffic driver (38 and 39 per
cent respectively) and general appeal as their number 2 influencer (34 and 30
per cent respectively), the need to satisfy a specific craving (23 per cent)
and the desire for quality menu items (22 per cent) round out the top reasons
why consumers frequent fast-casual outlets, while a restaurant being an old
favourite (28 per cent) and being known for its good pricing (19 per cent) are
the additional drivers for QSRs.

“Fast casuals are in an excellent position
for growth in Canada, some of which will come from QSR customers ‘trading up’
their dining experiences and FSR customers ‘trading down’ their average cheque
totals,” said Robert Carter, executive director of Foodservice at The NPD
Group, in a news release. “Though traditionally cheaper than sit-down
restaurants, fast casuals can demand a higher price point than their fast-food
counterparts because their made-to-order quality offerings are served in an
upscale atmosphere which is often newer and promotes greater menu innovation
than that of their competitors.”

As it stands, however, traditional QSR
foods are currently dominating the fast-casual marketplace, with French fries
(26 per cent), hamburgers (25 per cent), carbonated soft drinks (24 per cent)
and hot coffee (13 per cent) representing the most popular menu items. The
rising success of fast casuals is, therefore, largely linked to the perception
Canadians have of these establishments, as well as the ambiance they provide
for patrons who choose to enjoy their meals on premise (58 per cent). Likewise,
the NPD Group’s research also reveals that fast casuals have consistently
outperformed QSRs in the past two years when comparing customer satisfaction,
periodically having surpassed FSRs as well.

The emergence into Canada’s foodservice
market is not without its challenges, however. Even with its high-quality
positioning, fast casuals are vulnerable to being too expensive for regular
visits. In this respect, QSRs have the competitive advantage, as the average
cost per meal tends to be lower. Also, to compete more aggressively with this
trend, FSRs have begun promoting decreased pricing in the hopes that they will
be able to maintain their existing customer base.

“If the U.S. is any indication, Canadians
can expect that fast-casual restaurants will continue to be a bright spot for
the foodservice industry, which is still recovering from the challenges faced
during the recession,” continued Carter. “Even in tough economic times, the
segment has shown that growth can be achieved and we know from experience that,
as the new kids on the block, they are bound to attract customers.”

In the United States, visits to fast-casual
restaurants increased by eight per cent from 2012 to 2013, while spending
increased by 10 per cent, said the release. In Canada, both traffic and dollars
spent are comparable to American consumer habits, as visits increased by seven
per cent and spending by nine per cent in the same time frame.