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The change in market between fast casual and casual dining restaurants

With the announcement a couple of weeks ago that the Darden Restaurant Group was closing or trying to spin off it’s red Lobster restaurants, on can see the shift in the casual dining market. On the other end of the spectrum one can see the expansion of the fast casual market, especially in concepts like Panera, Chipotle, Five Guys, Shake Shack and others.

Restaurant lunch customers expect three fundamental things when they go out:

- Quick Service; Most lunch customers only have 30 minutes for lunch. The average Chipotle serve time is under 2 minutes, while a casual dining concept like Red Lobster, one would be lucky to get the standard glass of water in under 5 minutes.

- Good Food: Having a focused menu that is done well beats a many paged menu of items that the kitchen doesn’t have the skills to cook.

- Good value; Atypical fast casual lunch price is in the $ 10 to $ 15, which the customer perceives as good value for qood quality. In casual dining, it is difficult to get a lunch for less than $ 15.

Another problem that most of the larger casual dining restaurants have, is that their menus are very similar. If TGIF is famous for it’s ribs, then every other casual dining (Ruby Tuesday, Chilis, Applebees, etc..) have it on the menu. There is no distinguishing factor, except maybe the parking available and the access…

The casual dining restaurants that are successful have strived to make themselves distinctive,. for example the Banderas and the Houstons, with one page menus, well executed, with good beers and wines, and a focused mixed drink program.

Another issue that many of the fast casual dining concepts have, is that they re in the franchise trap. Franchisees own restaurants that are not making expected profits, while the corporate direction is to ask them to spend money to revamp the restaurants. This would work, if the would know how to reinvent themselves, but my experience working with them, is that they want something new, but as the project goes evolving they take it back to closer what they know and is in their comfort zone, so the resulting change is very small and mostly not significant.

Fast casual concepts have smaller stores, lower build out cost, and have more agility, and with a few exceptions have known how to keep their focus.

The restaurant business can be phenomenally successful and make great returns on investment, but they have to be well thought out and executed. it is not uncommon to have concepts with returns of more than 25%,  On the other hand, 80% of restaurants fail in the first 3 years.

Well thought out, kept simple, well executed, the keys to a successful project.

Sweetgreen Restaurant 1 300x200 The change in market between fast casual and casual dining restaurants

Sweetgreen design

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